Introduction: Baroness Wolf of Dulwich

Alison Margaret Wolf, CBE, having been created Baroness Wolf of Dulwich, of Dulwich in the London Borough of Southwark, was introduced and took the oath, supported by Lord Sutherland of Houndwood and Lord Rees of Ludlow, and signed an undertaking to abide by the Code of Conduct.

Roads: Young Drivers
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	Question

Lord Jordan: To ask Her Majesty’s Government whether they have any plans to produce a Green Paper to address the incidence of vehicle accidents involving young drivers.

Baroness Kramer: My Lords, Britain has some of the safest roads in the world. However, young drivers are disproportionately involved in collisions. There is a difficult balance to strike between promoting young drivers’ safety and their freedom to access work and education. We will not rule out further measures, but at present we are focusing our efforts on technological solutions. We recently commissioned research into how telematics can reduce accident rates among young drivers and the findings will help to shape future road safety policy.

Lord Jordan: I thank the Minister for that reply. Young drivers account for about 20% of all road deaths, yet they represent only 7% of all fully licensed drivers and have less mileage than older drivers. Measures have been tried for many years, and all have failed. It is now time for this issue to be grasped. I believe the time has come for an all-party commitment, before the next election, to a Green Paper on young drivers that is prepared to see more radical solutions than we have seen so far. This will not only harness those who want to support this but will certainly give some relief to all the parents in Britain who are terrified of the statistics I have quoted. Is the Minister prepared to be part of an all-party commitment to a new Green Paper?

Baroness Kramer: My Lords, the Government are not ruling out any programme that safeguards young drivers, but at the moment we are focusing our efforts on technological solutions, such as the telematics I described. We think they offer great potential and will help to get the right balance between safety and the freedom to use a car, which is so important to many young people.

Baroness Gardner of Parkes: Will the Minister consider looking at the Australian system, which is very much tougher on young drivers? Until a certain period has passed, you have to have a nil alcohol level, but the real secret is enforcement. Will she look at that policy?

Baroness Kramer: Obviously it is important to look around the world, and we do. I agree that enforcement is important, and that is one of the very important areas for telematics, which provide a running judgment on the way in which a car is being driven at any moment.

Lord Wills: My Lords, the Minister will be aware that of the serious accidents caused by young drivers, the great proportion of those accidents, and fatalities, are caused by young men drivers, not by young women drivers. This is as much a cultural problem as anything else. What are the Government doing specifically to tackle that aspect of the problem?

Baroness Kramer: We have extensive programmes on issues around drink driving, and I am sure your Lordships are aware of those campaigns. We have a very good safety record in this country, frankly, but we can never be complacent about that. As I say, the focus of the work is now on what we can do with telematics, which now enable us to tackle this problem in a much more targeted way. Research is under way so that we will be able to do that effectively.

Lord Bradshaw: My Lords, I concentrated on road safety for many years when I was a member of the Thames Valley Police Authority. The injuries which young men suffer—often at night, usually driving too fast, usually driving in wet conditions—are horrendous, and they are horrendously expensive. I wonder whether, instead of a Green Paper, the Minister would consider some legislation to make things like provisional licences a reality rather than something which people refer to every few years and then forget about.

Baroness Kramer: My Lords, it is crucial that we use research and research-based evidence to design effective programmes. As you will know, there are many different examples around the world, but under its current system, which we are obviously seeking to improve, the UK actually scores very well on international measures.

Lord Howarth of Newport: My Lords, will the noble Baroness be kind enough to explain, for the benefit of elderly drivers who may not know, what telematics are?

Baroness Kramer: My Lords, that, I am sure, his Lordship does know. It is basically a gizmo—if I may use such language—that is in the car, which constantly communicates the driving performance to the insurance company, so erratic driving and speeding are picked up on a live basis.

Earl Attlee: My Lords, is it therefore correct that the Government have wimped out on introducing graduated licences, and why do we allow motor manufacturers to build motor cars that can far exceed the prevailing speed limit?

Baroness Kramer: My Lords, as I say, we have not ruled anything out, but we think telematics are a useful direction to pursue because they let us target problem driving, so that many other youngsters who are driving well still have the scope to reach various education and social events. As for the question of general speed limits in cars, I have never addressed that, but I will try to find the noble Lord an answer and write to him.

Lord Davies of Oldham: My Lords, is this the only Government who perceive a Green Paper as green grass into which they can kick difficult areas? In March last year the Minister made a commitment to produce this Green Paper. Subsequently it was quite clear that we would not see it before Christmas. We know the nature of the grass leading up to the next general election. This Government have no intention at all of tackling this significant road safety issue, and they stand condemned on that fact.

Baroness Kramer: My Lords, the review of telematics will be a two-phase study, and we should see the first phase in April. That will lay out what further work needs to be done. At the moment we do not have the evidence base or the research that we need to make sure that we are coming up with the most appropriate solution.

Baroness Walmsley: My Lords, could I ask for a little more clarification about telematics? Does this mean that this gizmo has to be put in the car of every young driver for a period after they pass their test? Could my noble friend the Minister explain a little further?

Baroness Kramer: At the moment, Members of your Lordships' House may themselves have driving insurance that has telematics attached. Anyone going on to one of the websites and looking at various insurance premiums will see that discounts are available for most companies if there is an agreement to use the telematics system. It is still obviously fairly early on in its life. That is why we need to have research, because we want to understand whether there is a good relationship between this ongoing monitoring of what is happening in the car and the actual accidents about which we are all concerned.

Lord Dubs: The Minister has not mentioned young motorcyclists. Are they not the group that is particularly in danger of accidents?

Baroness Kramer: The noble Lord is right that young motorcyclists are also disproportionately engaged in accidents. I am frankly not clear on the insurance and telematics potential for motorcycles, and I will have to write to him on that.

Battle of Waterloo: 200th Anniversary
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	Question

Lord Forsyth of Drumlean: To ask Her Majesty’s Government what plans they have to mark the 200th anniversary of the Battle of Waterloo.

Lord Gardiner of Kimble: My Lords, the Government are working with Waterloo 200, a charitable trust, to commemorate the 200th anniversary of the battle. Many activities are planned across the United Kingdom and in Belgium. The Government announced, in June 2013, £1 million of funding to ensure that the famous farmhouse at Hougoumont is restored by 18 June. Activities to commemorate this anniversary and others have benefited from heritage lottery funding.

Lord Forsyth of Drumlean: My Lords, I am grateful to my noble friend, and delighted to hear that. However, in commemorating a famous victory over Napoleon by the Iron Duke and his European allies, does my noble friend agree that we must never forget the sacrifices made by the peoples of these islands over the past 200 years in defence of peace, prosperity, democracy and freedom in Europe? In this week of all weeks, we must stand together as a United Kingdom with our allies in defending this precious legacy.

Lord Gardiner of Kimble: My Lords, I entirely agree with the sentiments that my noble friend expresses. Indeed, Waterloo secured peace in Europe for nearly 50 years. Men and women from all parts of the United Kingdom have made the ultimate sacrifice in the cause of freedom over the past 200 years. We rightly commemorate them; we are as united now as we have been before in the cause of freedom and tolerance.

Lord Anderson of Swansea: My Lords, for Blücher should we not read Merkel, and recognise that one suitable way of commemorating this is to recognise that we have a national interest in keeping in close touch with our German allies and partners?

Lord Gardiner of Kimble: My Lords, it is undoubtedly the case that we should be in touch and work with all our partners on current affairs, but it is of interest in relation to Waterloo that a number of Länder are commemorating the Battle of Waterloo. The noble Lord mentioned Germany. Hanover, Brunswick, Berlin, Hamburg and Wiesbaden are all commemorating the battle.

Earl Cathcart: My Lords, I am fortunate to have in my family archives some original maps of the battlefield used by various members of my family who fought at Waterloo. One was aide-de-camp to Wellington and another had three horses shot from under him during the battle. Happily, both survived and went on to become generals like their father, grandfather and great-grandfather. So, naturally I welcome the Government’s donation to help the restoration of Hougoumont. However, can I ask about the overall cost of that project and the overall funding? Presumably, individuals have donated. Have any other countries made donations? Presumably not the French.

Lord Gardiner of Kimble: My Lords, as well as the United Kingdom Government’s funding, the Government of Wallonia—part of Belgium—have contributed €900,000; there are also Belgian sponsors and UK sponsors of €1 million and £2 million respectively. The Hougoumont site is hugely important, as is known: it was the battle within the battle.

Baroness McIntosh of Hudnall: My Lords, this House has within its walls a remarkable commemoration of the Battle of Waterloo in the shape of the Daniel Maclise fresco in the Royal Gallery. It commemorates not only the triumph of Waterloo but also its great tragedy. Will the Minister give the House an up-to-date account of where we are with the restoration of that fresco and its partner?

Lord Gardiner of Kimble: My Lords, I spoke to the curator this morning, rightly anticipating this question. This is a very intricate and complex matter and the University of Cologne is considering all the points that come out of its research. After that careful consideration —because obviously we do not want to do anything at all that could further damage the paintings—this will come before the Works of Art Committee. The options before it will then be considered, and then all of us will hear more.

Baroness Bonham-Carter of Yarnbury: My Lords, picking up on the artistic aspect, does the Minister agree that one of the most effective commemorations of the First World War was “Blood Swept Lands”—the ceramic poppies at the Tower of London? That was a very strong and evocative example of the power of artistic endeavour in bringing people together. I agree with my noble friend Lord Forsyth that Waterloo 200 should similarly emphasise not the triumph but the tragedy of conflict—tragedy that we experienced so starkly last week.

Lord Gardiner of Kimble: My Lords, I think that that is why we have all, rightly, used the word “commemoration” and never “celebration”; it precisely encapsulates what we all feel about the sacrifice of these dreadful battles. However, we are grateful that we prevailed.

Lord West of Spithead: My Lords, I understand that, as part of these celebrations, one of the events will be a re-creation of the dispatch from Brussels to London. It is a very good educational tool. HMS “Peruvian”, which took the dispatch from Ostend, was becalmed off Ostend and the captain and four sailors then rowed 18 miles to Broadstairs. Does the Minister not think that if we are going to re-create that, we need to start training some captains in the Royal Navy now to achieve it?

Lord Gardiner of Kimble: My Lords, the dispatch and delivery of this great news, and the peace that unfolded in Europe, were hugely important; and, indeed —as the noble Lord will confirm—the Battle of Trafalgar ensured that there was peace at sea for a very long time.

Lord Spicer: My Lords, on the morning of the Battle of Waterloo the Duke wrote: “I have no time to write a short letter so I will write a long one”. He was probably referring to a divorce case in which he was unfortunately one of the cited parties. Is it not the case that, had the journalistic practices that prevail today applied in that time, he might never have been supreme commander and we might have lost?

Lord Gardiner of Kimble: My Lords, we can all be extremely grateful for the Duke of Wellington’s courage and bravery.

Alcohol: Addiction
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	Question

Lord Avebury: To ask Her Majesty’s Government what are Public Health England’s plans for combatting alcohol addiction.

Earl Howe: My Lords, Public Health England recognises that the harmful use of alcohol is a major health risk. The harm from alcohol is preventable; alcohol is one of seven key priorities that PHE is focusing on. It is implementing a programme to support national and local government, the NHS and partners to implement evidence-based policies and interventions. Included in this work is the reduction of alcohol addiction.

Lord Avebury: Considering that three years ago, there were 1.1 million alcohol addicts in England and that abuse of alcohol was costing the nation £21 billion—and probably much more than that today—how can the Minister reconcile the fact that we spend only one-tenth as much on treating alcohol addiction as we do on patients suffering from drug addiction? Why is it taking until 2016 to update the guidance on access to mutual aid fellowships such as Alcoholics Anonymous, when the ACMD has shown that there are effective ways of combatting the addiction?

Earl Howe: My Lords, my noble friend was kind enough to give me advance warning of those questions. I have to say to him that we do not recognise the figures he quotes; nor do we think that the comparison he makes is like for like. In 2007, an estimated 1.6 million people had some degree of alcohol dependence, including those with a slight dependence. Of those, some 250,000 were believed to be moderately or severely dependent. The specialist treatment centre system continues to work well for many people. Many of the trends in terms of treatment are positive. As regards supportive relationships, I fully agree with what he said; they are a vital element in helping individuals build their own recovery. In October 2013, Public Health England produced a strategic action plan for supporting the treatment sector to strengthen its links with mutual aid organisations to ensure that everyone in treatment can benefit from that support.

Lord Hunt of Kings Heath: My Lords, how many meetings have been held between Ministers and representatives of the alcohol industry since the last election? Why are the Government delaying the publication of the Chief Medical Officer’s review of safe drinking levels until after the election? Are the two connected?

Earl Howe: No, my Lords, they are not. The Government have regular dialogue with the industry, but the industry does not formulate policy and never will do. There has been a delay on the new guidelines; the consultation on them had been planned for December last year but will not now happen until shortly after the general election. That is simply due to problems with Public Health England commissioning expert advice on guideline methodologies, which took longer than intended. The academic body that PHE wanted to do the work decided that it did not have the capacity to do so. A tender exercise was therefore necessary and the work is being carried out by a team from Sheffield University.

Baroness Howarth of Breckland: My Lords, the Minister is well aware of the effect of alcohol on unborn children. What are the Government doing for young mothers who are either addicted to drink or unaware of the difficulties that alcohol creates for their children in terms of education both through the health service and the education system?

Earl Howe: My Lords, the Royal College of GPs has a special focus at the moment on giving advice to GPs. We are also dramatically increasing the number of health visitors, who are, of course, highly instrumental in influencing the behaviours of mothers-to-be and young mothers.

Lord McColl of Dulwich: My Lords, does the Minister accept that although alcohol was until recently the commonest cause of liver disease, the commonest cause is now the obesity epidemic, which is killing millions of people? Some 13 million people in this country are suffering from obesity—far more than are suffering from alcohol problems.

Earl Howe: My noble friend is absolutely right. More than 90% of liver disease is due to three main, preventable and treatable risk factors—alcohol, hepatitis B and C, and obesity. Alcohol accounts for 37% of liver disease deaths, but obesity is indeed a major factor in this.

Lord Brooke of Alverthorpe: Will the Minister explain to the House why, when his Government came to power, they tore up the draft strategy on liver disease that had been prepared by the previous Government? What are they going to do to put one in place and, given the complaints we have heard, make sure that the growth in the number of deaths is reversed?

Earl Howe: My Lords, Public Health England has a programme of work to ensure that all the bases are covered. It is producing a report for government that will be published later this year. Over the next 18 months,
	there will be a longer programme of work on such things as a framework for liver disease, setting out the evidence base for the introduction of a minimum unit price for alcohol and using alcohol as the trail-blazer for a new whole-system approach that establishes what works and is clear on the return on investment, to enable government to take action based on evidence.

Baroness Hollins: My Lords, the Board of Science at the BMA, which I chair, believes that the availability of cheap alcohol, such as white cider, is one of the main causes of the rise in addiction. We believe that the sale of cheap alcohol needs to be tackled through the introduction of a minimum unit price and that prevention really is better—and cheaper—than cure. What does the Minister think about that?

Earl Howe: Minimum unit pricing remains under consideration while additional evidence becomes available. We are not taking it forward at the moment. We need to give careful consideration to any possible unintended consequences of minimum unit pricing, such as the potential impact on the cost of living, the economic impact of the policy and increases in illicit alcohol sales. It is, and has only ever been, part of the Government’s alcohol strategy—although, as I mentioned a moment ago, Public Health England will be assembling the evidence base for the introduction of a minimum unit price for alcohol to advise the next Government.

Lord Garel-Jones: Does the Minister agree with me that alcohol is properly defined as a habit-forming, hallucinatory drug, and is it not about time that Governments began to treat the use and abuse of this particular drug with the same seriousness as they do the abuse of other drugs?

Earl Howe: My noble friend makes a very good point. Alcohol in moderation is something that we can all enjoy, but people who binge drink or drink drive cause problems for accident and emergency departments. They are the people we have to bear down upon. I believe that we do now have effective systems of regulation and enforcement, which are proving their worth.

Village Life
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	Question

Lord Roberts of Llandudno: To ask Her Majesty’s Government what steps they are taking to safeguard village life.

Lord Ahmad of Wimbledon: My Lords, this Government are safeguarding village life. We have already given community rights to give power to communities, enabling them to shape their place and protect their local assets. We have also delivered over 7,500 affordable homes in the smallest rural communities. The £20 million community branch fund is supporting Post Office community branches, enabling them to further enhance their sustainability
	and viability, and the Rural Development Programme for England has invested over £400 million to grow the rural economy.

Lord Roberts of Llandudno: I thank the Minister for that reply, but I am sure he will agree that villages of, say, 1,000 or fewer residents are not just to be suburbs of larger towns, but places where people can live and earn their living. Can the Minister tell me what plans the Government have to encourage the liveliness and buoyancy of villages? Could we ask every community and parish council to draw up a plan so that they know what their present status is, what their problems are, and what their proposals are for the future?

Lord Ahmad of Wimbledon: I agree with my noble friend; he makes a very good point about the importance of village life. As I have already alluded to, the Government are investing a great deal in this respect. Let me draw the attention of the House to the Rural Community Buildings Loan Fund that the Government are supporting, which is a £700,000 Defra fund that is managed by ACRE and encourages communities to raise funds. Of course, the Government have also pushed and worked with the Post Office to ensure that post offices are retained at a local level and we are working alongside banks to ensure that communities in the most remote parts can access financial services. Indeed, I believe that RBS has just started a mobile scheme that goes out to about 90 rural towns that are hard to reach, which is quite innovative and certainly is supported by the Government.

Lord Clark of Windermere: Is the Minister aware that in many villages in national parks the fact that more than 50% of the houses are now used as holiday lets means, for example, that GP practices are having to close in places like Coniston and Hawkshead in the Lake District because there are insufficient permanent residents? What plans does the Minister have to consider the proposals from local authorities that they should have some say on the designation of holiday lets?

Lord Ahmad of Wimbledon: The Government have already outlined their commitment to the localism agenda. I have talked previously from the Dispatch Box about local enterprise partnerships. These are prevalent not just in towns but in villages and within the rural economy. Currently five pilot rural growth networks have been established in Warwickshire, the north-east, Swindon in Wiltshire, the heart of the south-west and Cumbria. These are all working with the local authorities and local lets to encourage local growth. The noble Lord’s point about holiday lets is well made. However, we are working with local authorities to ensure the vibrancy of local economies and local housing.

The Lord Bishop of Rochester: My Lords, reference has been made at various points to housing. The Minister will be well aware of the importance for the sustainability and vitality of rural communities of a good mix of housing, housing tenure and so forth. Does he agree that community land trusts are a valuable and perhaps essential way of ensuring a continuing
	and permanent supply of affordable housing in rural communities? If so, what commitment have the Government made to increasing the number of such trusts?

Lord Ahmad of Wimbledon: The right reverend Prelate makes a valid point. We work with local authorities to ensure that we identify trusts which can take forward development of the local economy. The community right to build was part of our localism agenda and we are encouraging that. However, I fully acknowledge that there is a lack of affordable housing in villages, which has a knock-on effect on sustainability. We are currently looking to deliver more than 73,000 affordable homes that have been provided for in rural local authorities in England since April 2010.

Lord Deben: When my noble friend talks to local authorities, will he talk to them seriously about their partiality in these matters? Many of them will deal only with what they call larger villages—central villages that are convenient for them—rather than with small villages. I, for example, am told that I do live not in a village but in a scattered settlement. It has always been a village but it is now a scattered settlement. The reason is that the local authority does not want to treat us as it treats others because that would be inconvenient for its bureaucracy. Will the Minister please have a word about this partiality?

Lord Ahmad of Wimbledon: I of course recognise my noble friend’s concern, including his reference to a scattered development. I will certainly look into that. In Arun in the county of Sussex the country’s first three community right to build orders were successfully passed in Ferring, Arun district, in December last year.

Lord McKenzie of Luton: My Lords, the Minister has acknowledged the lack of affordable homes in rural areas. In particular, is there not a lack of smaller homes? In these circumstances, does not the bedroom tax have an especially pernicious effect on rural areas, and is not the only solution to get rid of this wretched tax?

Lord Ahmad of Wimbledon: The important point is how many homes are being built. I am sure the noble Lord recognises that we currently have a record number of housing starts and, indeed, housing builds, and that is what we need to encourage. I have already alluded to some of the initiatives that we are taking. I believe my noble friend Lord Freud has previously highlighted that, where difficulties with the bedroom tax are identified, the Government have made available funds to help people in that situation.

Health and Social Care (Safety and Quality) Bill
	 — 
	First Reading

The Bill was brought from the Commons, read a first time and ordered to be printed.

Self-build and Custom Housebuilding Bill
	 — 
	First Reading

The Bill was brought from the Commons, read a first time and ordered to be printed.

Recall of MPs Bill
	 — 
	Order of Consideration Motion

Moved by Lord Wallace of Saltaire
	That it be an instruction to the Committee of the Whole House to which the Recall of MPs Bill has been committed that they consider the Bill in the following order:
	Clauses 1 to 6, Schedule 1, Clauses 7 to 10, Schedule 2, Clauses 11 to 16, Schedules 3 to 5, Clauses 17 to 20, Schedule 6, Clauses 21 to 25.
	Motion agreed.

Pension Schemes Bill
	 — 
	Committee (2nd Day)

Clause 47: Pensions guidance
	Amendment 29
	 Moved by Lord Newby
	29: Clause 47, page 20, line 8, after “members” insert “, and survivors of pension scheme members,”

Lord Newby: My Lords, the Government intend that all those who stand to benefit directly from the new pensions flexibilities provided by the Taxation of Pensions Act 2014 should have access to pensions guidance, which will help to empower them to make informed decisions about their pension savings.
	The amendments to Clause 47 and Schedule 3 are technical amendments to ensure that this is the case. The amendments in this group adjust the definition of pensions guidance in new Sections 333A and 137FB of the Financial Services and Markets Act 2000, to extend pensions guidance to survivors of members who have benefits to which the flexibilities will apply, rather than just to members of pension schemes. This is needed because in some circumstances pension schemes may provide benefits to survivors of members of the scheme other than insurance-based products or cash lump sums—that is, flexible benefits—without their becoming members of the scheme. I beg to move.

Lord McAvoy: My Lords, a large number of government amendments have been tabled for today’s business. The impression given is of last-minute thoughts responding to last-minute contributions and suggestions. If the Government had been doing their groundwork properly, they would not have had to respond to such issues by moving the amendments.
	I thank the Minister for doing his best to explain the amendment. I think he has said that these are minor and technical amendments, but can he confirm that that is so and that they do not substantively change the effect of the Bill? Quite frankly, we know what the Government are saying in these amendments. I do not think there has been time to study them very well, so we will reflect on what the Minister has said and consider it very carefully ahead of Report.

Lord Newby: My Lords, I can absolutely confirm that these are minor and technical amendments.
	Amendment 29 agreed.
	Clause 47, as amended, agreed.
	Amendment 30
	 Moved by Lord Bradley
	30: After Clause 47, insert the following new Clause—
	“Guidance guarantee: annual review
	The Secretary of State must each year produce a report on the effectiveness of the guidance under Schedule 3, and that guidance must include—
	(a) the number of people who have taken up the guidance;
	(b) the number of people eligible to take up the guidance who did not do so;
	(c) the effectiveness of the guidance in preventing instances of consumer detriment through the purchasing of inappropriate products.”

Lord Bradley: My Lords, I beg to move Amendment 30. At the start of our deliberations, it is worth reminding the Committee that at Second Reading we took two pension Bills together: the Pension Schemes Bill and the Taxation of Pensions Bill. We did so because it was recognised that the two Bills were interrelated and that the issues to be scrutinised and debated were inextricably linked between them. While there was no debate in this House on the Taxation of Pensions Bill, as it was a money Bill, it would be impossible not to refer to these interrelationships in our deliberations today on such matters as pension guarantee, guidance guarantee, product development and the financial and economic consequences of the Bills.
	Furthermore, we will continue the theme that we developed on day one in Committee: since so much of the Pension Schemes Bill relies on regulation—to date such regulations have not seen the light of day—we will continue to press the Government for far more information on the regulations, to try to make as much sense as possible of how the proposals in the Bill, and the Bills, will be implemented.
	Similarly, we have highlighted the speed at which this legislation is being brought to the statute book, which further hinders scrutiny not only inside Parliament but by key stakeholders. These include those who will be responsible for delivering the crucial guidance guarantee—particularly Citizens Advice and the Pensions Advisory Service—and the pensions industry and its representative bodies, who will need to respond to the effects of the policy changes, some of which come into force in barely three months’ time.
	As we have made clear throughout our deliberations, the overriding objective is broadly to support the freedoms and flexibilities in the Bill and to ensure that the public have all the information they need and the guidance they seek to ensure their interests are protected, and that they receive the best outcomes for their retirement without the fear of the scandal, for example, of mis-selling, which the public encountered some years ago.
	One example of what I am alluding to emerged only today with the revelation from the Government that only 45% of new pensioners will be entitled to the full new flat-rate state pension in the first five years of the system. That is 2 million people who will not get the full amount. Certainty of the amount of the new pension will be critical in the decisions people may make about how they plan their retirement income or draw down cash immediately after April. I know that the Minister will want to clarify the situation when he responds.
	It is in that spirit that I move Amendment 30. At the heart of the amendment is our wish to ensure that the Bill work in the way that it is intended, and that the guidance will be both taken up and prove effective in helping people to choose the right products to fund their retirement or to make the right decisions about lump sums or other retirement income. We believe that guidance is needed but we are concerned that this House has, to date, been provided with too little information about what guidance will be offered. Additionally, will the quality of this guidance ensure that people make the right decisions for themselves and their families, now and in their later years?
	I welcome the fact that more information about the guidance has been produced today and I thank the Minister for providing the Committee with it. In particular, we now have the title of the service, “Pension Wise”, and the branding, “Your Money. Your Choice”. However,I stress that at this point we are talking about guidance and not advice. We have made this point on a number of occasions during our deliberations and it is important to keep in mind the distinction between guidance and advice on which people rely.
	I know it is intended that the guidance should be comprehensive—that has been elaborated on today in the announcement from the Treasury—which, to some extent, is reassuring. The assumption is part based on the discussions in the Public Bill Committee in the House of Commons, especially the interchange between the Minister for Pensions, Steve Webb, and the shadow Minister, Gregg McClymont. The Minister said in the other place:
	“Guidance will discuss the pros and cons of different financial products and services”.—[Official Report, Commons, Pension Schemes Bill Committee, 4/11/14; col. 283.]
	He quoted the Financial Conduct Authority, saying that,
	“guidance will need to be tailored, providing consumers with sufficient personalised information, so that they can understand their options and make confident, informed decisions about their retirement options”.
	The FCA also thinks guidance should include information on tax matters. This is clearly an important consideration. The Minister responsible in the other place went on to
	say that a guidance session has to be person-specific and that he was consulting for opinions, attitudes and expectations on what is needed in good guidance.
	I realise that the Treasury is taking this matter forward and leads on this. Again, I further welcome the information that has been provided in the guidance guarantee today. We have to ensure that we can digest the contents of that information that I received at lunchtime today, so that we can further consider the matters within it. That may lead to further consideration of the detail on Report.
	It is reassuring to know that the Minister envisages guidance sessions to be comprehensive, but it raises the question of how much it will cost and how those costs will be met. The National Association of Pension Funds estimates the cost of advice for people seeking an annuity under the current system to be £681 million—I mean £681 per session. It does not go quite as far as millions; we might get to that at some later stage. That is hardly a simple assessment but it is not such a comprehensive session, in many ways, as the far-reaching guidance envisaged by Steve Webb, the Minister, and the Financial Conduct Authority.
	At £681 per session, it will cost £480 million to provide those 600,000 people retiring in 2015-16 with guidance. But how many people will, in practice, seek guidance? It is safe to assume that some will not choose to take it up, perhaps because their pension pot is too small—maybe less than £10,000, although it could be argued that this group is the very one that will need the best advice. Others will pay an independent financial adviser. The Legal & General group helpfully undertook a trial of free advice to some 9,000 people. It reports that only 2.5% took up the offer. This would cost £154,000 at £681 per session. The Chartered Insurance Institute estimates a 90% take-up. This would cost £368 million. Which do the Government think most likely to be correct? Have the Government risk-assessed this? If so, can this information be available to the Committee? I note that the Treasury has today estimated that a cost of the service at £35 million for the year 2015-16. I would therefore be grateful if the Minister would tell the Committee how this amount has been calculated.
	The Minister also told the Public Bill Committee, on 4 November in the other place, that guidance providers will not be subject to FCA regulation. Instead, the FCA must put in place standards that designated providers must work within. Designated providers must be chosen and approved by the Treasury and the list will be available to the public. The FCA will have a duty to monitor compliance and the Treasury will take responsibility for ensuring that the FCA framework is sound enough. Is that sufficient? Monitoring may be comprehensive but fall short of regulation. Perhaps the Minister can assure us on how this compliance will work. As the Minister may imagine, at the heart of my concern is a strong desire to avoid another mis-selling scandal, which would put the guarantee for savers at risk, with savers therefore failing to get the retirement income they need and deserve.
	The current designated partners, the Pensions Advisory Service and Citizens Advice, are very credible providers of advice and guidance generally. I am sure that Citizens
	Advice will ensure that all 380 independent bureaux, which will deliver that advice, have all the necessary public liability insurance in place to protect them from claims arising from the guidance tipping into advice and then being acted on. But is it right not to regulate this market? Will others seek to enter the market with far less credible track records than these two esteemed bodies? For example, will people selling products be able to offer guidance via the designated lists in the future? Furthermore, could the Minister explain what redress people will have in practice? With 600,000 people entitled to free advice, it is inconceivable that something will not go wrong. The fact that it is guidance, not advice, could prove to be an inadequate veil to hide behind. The Minister in the other place seemed to think that few people would seek redress. However, I remain concerned, and the implications could be huge.
	I turn to the specifics of our amendment on an annual review of the guidance guarantee. In spite of what has been provided today and throughout the deliberations at all the stages of the Bill, we are being asked to pass legislation here when we still have little real information on which to base full support for it. I hope the Minister can provide a great deal more detail to the Committee today, based on the information that has been provided. If necessary, as I said earlier, we can come back at a later stage for further deliberation.
	I conclude with some points that I have gleaned from scrutinising the debates and evidence given in both Houses. First, the guidance is intended to be comprehensive and we welcome that. But we note the views of Rachael Badger of Citizens Advice, who told the Committee on the Taxation of Pensions Bill last year:
	“Guidance sessions will be tailored to people’s circumstances. They will cover things such as tax benefits, possible social care needs, savings and debt; there will also be signposting to regulated advice if that is appropriate”.—[Official Report, Commons, Taxation of Pensions Bill Committee, 11/11/14; col. 23.]
	Will the Government confirm in their response today that all those matters will be properly covered?
	Secondly, I recognise that guidance will also be available online and by telephone through the Pensions Advisory Service, but will the Minister give details of the proposed 45 minute sessions that we received details of in the information today and of how the cost of the £35 million that I have already alluded to has been calculated for 2015-16? Thirdly, will the Minister allay the fears identified by, among others, the Financial Services Consumer Panel? In the evidence session to the Taxation of Pensions Bill, it said:
	“We are very worried about the face-to-face guidance delivery. It is a huge challenge for CAB to get ready for April”.—[Official Report, Commons, Taxation of Pensions Bill Committee, 11/11/14; col. 12.]
	The training and capacity of Citizens Advice and, of course, the Pensions Advisory Service must be in place. Can the Minister confirm that it will be—for the number of people who will be seeking that advice—perhaps before, but immediately after, the April implementation date? Fourthly, I repeat our concern that the delivery partners will not be regulated but merely monitored.
	The central argument, as we know, is that we are being asked to have faith that the Government have fully appreciated all the implications of the legislation, in spite of the speed of implementation and the fact that so much relies on regulation and not primary legislation. We are being asked to take too much on trust. Not unreasonably, this amendment seeks to reassure us that the legislation will work in the way intended. It is right to ensure the quality of the guidance and that adequate funding will be available so that people can have access to the guidance that they need. Specifically, we are asking for a review to include, first, how many people are accessing the guidance that they need. Given that the estimates vary between 2.5% and 90%, this is crucial. Given that many people have limited knowledge about pensions, we need to monitor this to ensure that people know of the guidance that is available to them and where to get it, and that the service is promoted. Secondly, the review should look at why people do not take up guidance. Given that we all agree that it is necessary to offer guidance to help people make informed choices about pension pots and financial planning for their retirement, we need to be sure that they have considered guidance, and if they have elected not to take it up, it would be useful to know why. Thirdly, we need to assess the quality of that guidance and whether it is preventing people from purchasing the most appropriate products. We need to be assured that as the guidance rolls out, the first users of the service are not seen just as guinea pigs but are used to inform and change guidance that is then appropriate because of the consequences of the information provided by those first people using it.
	I am sure that we all recognise the need to provide people with guidance to make our pensions products safe for future pensioners. Given the lack of detail in the Bill, I am sure the Minister will want to support this amendment so that we can have a regular review of the workings of the Bill, and in particular how the pension guidance guarantee works in practice for the benefit of the people who use it. I beg to move.

Lord Freeman: My Lords, I find myself in sympathy with the spirit of the amendment but, I am afraid to say, the detail is somewhat defective. The spirit must be right because the more information that can be available and collected accurately, the better, so that the schemes in the Bill can be improved or amended in due course.
	I draw the attention of my noble friend the Minister to the comments of the chartered institute and Royal London; first, on eligibility; secondly, on take-up; and, thirdly, on effectiveness. It is not really possible within a short period of time—that is, on an annual basis—to measure accurately the results of this legislation under those three categories. I look forward to what the Minister has to say, whether in response to this amendment or in due course on Report. I very much associate myself—and, I know, some of my colleagues—with the spirit of the amendment but I think the devil is in the detail.

Lord Newby: My Lords, I am grateful to the noble Lord, Lord Bradley, for the way in which he moved the amendment, and for setting out some of the broader issues that are covered by a number of groups. I hope
	the Committee will forgive me if I, too, take my introductory remarks slightly wider than the amendment itself, because I think they are both relevant to this amendment and spill across a number of groups.
	First, I draw noble Lords’ attention to the publication today, which the noble Lord, Lord Bradley, referred to, of an update from the Treasury on the implementation of the pensions guidance service. It announced that the brand for the service will be Pension Wise, with the tagline, “Your money, your choice”. This branding will be used by all delivery partners and is designed to be easily recognisable. The HM Government logo will be used to support the Pension Wise brand where appropriate, to underline the credibility of the service. In answer to one of the points made by the noble Lord, Lord Bradley, potential scammers and fraudsters should be aware that the Bill introduces a new criminal offence which means that anyone passing themselves off as Pension Wise could face prosecution. I can reassure the noble Lord at this point about the way in which the guidance providers will themselves be regulated, and on the basis for the compliance.
	The standards for designated guidance providers are in fact a Financial Conduct Authority instrument, so it is a legal document which it is exercising, I am sure the noble Lord will be pleased to know, under Section 333H, Standards for Giving of Pensions Guidance by Designated Guidance Providers, of the Financial Services and Markets Act 2000. It is therefore very much a statutory underpinning of all the guidance which guidance providers will have to follow. This is a detailed document to which I will refer later. Also from today, following the publication of the document, individuals have the opportunity to register their interest in early access to the service as part of the piloting activities. The publication also sets out details of how consumers can access and use the guidance, with further information on the progress and costs of implementation. I am sure that noble Lords will find this information useful.
	I can assure the House that the Government are committed, in looking at the specific amendment, to a full programme of monitoring and evaluation which will look at the uptake of the guidance as well as how it is achieving its objective of informing consumer decision-making at the point of retirement. I share the noble Lord’s focus on ensuring that we maximise take-up of the guidance, and that is why the Treasury is legislating, through this Bill, to place a duty on the FCA to require pension providers to signpost people to the guidance as they approach retirement.
	Last year, the FCA consulted on its proposals for delivering against this duty, and in November published a very detailed policy statement with its near final rules. Following Royal Assent, these rules will require pension providers not only to signpost individuals to the guidance service in wake-up packs issued four to six months ahead of an individual’s nominated retirement date, but to recommend to their customers that they seek guidance or advice whenever a consumer wishes to access their pension fund. That is one of the reasons the Government are announcing the Pension Wise brand now, so that the industry can get ready for these new requirements and start bringing the service to their customers’ attention as soon as possible.
	I will clarify a statement I made to the House at Second Reading in response, I think, to the noble Lord, Lord McKenzie, on the issue of requirements in the round and progress towards the standardisation of the pension statements that providers will send to their customers approaching retirement. While it is not yet a formal requirement, the Government are clear that progress must be made by industry more quickly. The FCA has clarified in its near final rules that will underpin the guidance service that information about a customer’s pension pot must include, at a minimum, the current value of the pension pot, along with information on guarantees and other relevant special features. Building on this, the Treasury is working with the industry to standardise how the key information is presented. We have made it absolutely clear that the Government consider this to be a key priority. A wide range of respondents to our consultation last year on the pension freedoms made a convincing case that it is necessary to help consumers understand and engage with decisions on what to do with their pension savings. The Government welcome the recent commitment from industry trade bodies to support the development of standardised materials by the Treasury and to encourage their members to use them in communications with their customers as soon as possible.
	The Government welcome the FCA’s commitment to consider making such standardisation a mandatory requirement in the wide review of its rules that will take place in the first half of this year. If the trials show that such standardisation helps consumers, I imagine that will be a very strong case for the regulator to require it. We must recognise, however, that not all individuals will seek to take up the guidance offer. It is their choice to do so. They may have other sources of help and advice, such as an independent financial adviser or advice services provided by their employer. We must ensure that consumers know that the guidance service is available and how it can help them, and encourage consumers to use the guidance as far as possible. We must, however, respect the fact that there will be consumers who will be content and equipped, for a variety of reasons, to make decisions without taking guidance. The FCA has introduced a number of safeguards to ensure that consumers are encouraged to seek guidance or, if they do not, are provided with the necessary information to support decision-making.
	In summary, it is made clear that firms should not do anything to dissuade customers from getting the guidance. It has reaffirmed the expectation that firms will encourage consumers to shop around on the open market. It has introduced a new requirement that when communicating with customers about accessing their pension funds, firms are required to ask whether they have taken guidance or relevant financial advice and, if not, to encourage them to do so. It has introduced a new requirement on firms to recommend that consumers should seek guidance or advice rather than simply signposting to it. It has also confirmed that firms will be required to give a description of the tax implications of the option selected by a consumer.
	Similarly, we must accept that some people may make decisions which may not result in the best outcome for them or may not seem to an outside observer to be
	“rational”, even after taking advice. That is their choice and their responsibility, and their decisions will be influenced by a range of factors unique to them, but it is worth noting that the FCA has clarified that where a firm is concerned that an individual is making a decision which does not seem consistent with their circumstances, it can check this with the consumer without it being regarded as regulated financial advice.
	For too long, individuals’ ability to make choices about how they use their pension in retirement has been constrained by the majority of people being forced down a single route. It is therefore hardly surprising that this has resulted in a lack of engagement in the decision-making process, consumer inertia and a market that was not working in people’s interests. What the Government are working towards now, as they introduce much welcomed freedom and choice, is genuine consumer engagement with the decision-making process. Guidance will be key to that, and the Government will closely monitor and evaluate the effectiveness of the service in supporting consumer decision-making. However, requiring a box to be ticked to confirm guidance has been received or mandating guidance goes against the grain of consumer choice and consumer responsibility.
	I apologise for setting out the background in such detail, but I hope that noble Lords will forgive me. Perhaps I may turn to one or two of the specific questions asked by the noble Lord, Lord Bradley. He asked about estimates for take-up of the guidance and how we had reached the figure of £35 million. As he pointed out, the estimates for the take-up of the guidance have been very wide, ranging from 2.5% to 92%—they could not be wider. In fixing a figure of £35 million, we have made our best estimate of the resources needed to deliver the advice in the first instance. It reflects the fact that demand is necessarily difficult to predict in the first year and we accept that the figure may need to be amended in the light of experience. In the document that we have published today, we have explained that if further funding is necessary to meet the demand, the Treasury will meet that cost in the short term. The guidance is funded on a levy. The levy has been set at £35 million this year. If we find that we have to spend £40 million or whatever, the Government will meet that cost in the short term to ensure that we meet the demand and reclaim it from subsequent years’ levies. There is no great science in getting the right figure at this stage. There is no figure for take-up around which there is consensus, but we think that we have reached a sensible starting figure.
	On whether we think that training is in place, obviously a big programme is needed to achieve this, but we are confident that the training we are doing is adequate. Citizens’ Advice has a very good track record of giving advice to people in a whole range of circumstances, and this is just another. All CAB and TPAS staff delivering the guidance will receive training with a view to meeting the rigorous FCA standards. They will be required to demonstrate that they have the necessary pensions knowledge and the ability to deliver a quality guidance service before they talk to the public. There will also be a programme of continuous specialised improvement that maintains and develops their technical and professional skills.
	The noble Lord also referred to the story on the BBC this morning about the new state pension. We think that the story gets it completely wrong by seeming to pass off as a new feature of state pensions the need to reflect that millions of people have been contracted out into private pension schemes since SERPS started in 1978. When the new state pension starts on 6 April 2016, we will assess people’s national insurance record, we will value their contribution and record under the new rules and the existing rules, and the higher value will be the starting amount in the new state pension. We will make a deduction if someone has been contracted out of the additional state pension. We do this for people claiming their state pension now.
	This is because contributions were made to a private pension and people have either paid national insurance contributions at a lower rate, or some of the national insurance contributions they paid were used to contribute to their private pension. If we were to ignore these contacted-out pensions, whether in the old scheme or the new, people would be paid twice for the same national insurance contributions, and that would be unfair on all of today’s pensioners and on people who have never been contracted out. The fact is that when we value people’s contributions in 2016 they will get at least what they would have got for their national insurance contributions under the current system. Many will get more, with women, carers, low earners and the self-employed set to benefit the most. Under the new state pension, people will need to have only 10 qualifying years to be entitled to a state pension. From 2016, contracting out will be withdrawn and people will all pay the same percentage rate of national insurance for the same state pension.
	That is some way from the specific amendment we are discussing. Returning to it, I hope that I was able, in the early part of my remarks, to convince the noble Lord that we are taking the question of monitoring and evaluation seriously and that he will feel able to withdraw the amendment.

Lord McKenzie of Luton: My Lords, can the Minister help me on two points which arise from the Pension Wise document we got just this morning? Page 7, which recites progress to date, says that,
	“until the service reaches maturity, overall responsibility for service design and implementation will remain within the Treasury”.
	Will the Minister expand on that and say at what stage he believes the service will reach maturity?
	Page 17 says:
	“Telephone and face to face guidance sessions will initially be designed as a single session per consumer, though this will be kept under review”.
	Will the Minister say something more about the components of that review? What will be taken into account in determining whether that single session for consumers is adequate?

Lord Newby: It is difficult to give a precise answer to the noble Lord’s first question, about maturity. The Treasury is, for good or ill, going to keep its mitts on this process until we are very satisfied that it is working well and is seen to be in a stable and successful state.
	As for the single session, noble Lords will be aware that people will be able to access the service either online, on the phone or in person. The hope is that by
	giving people all the financial information that they require, by encouraging them, in the case of pension providers, and by explaining to people, before they turn up to their session, the kind of information that we are looking for, it will be possible to give adequate guidance in one session. We accept that that will not be enough for some people; they will have forgotten something or a thought will occur to them once they have left. We hope that of those cases, which we hope will be a small minority, a majority will be able to get an adequate response to a specific query by going to the website.
	We accept, however, that for some people that will not be the case, and that in a minority of cases some people will need to go back, either to make a subsequent phone call or to have a subsequent meeting. However, we are working very hard to minimise that necessity—because, obviously, getting things right first time will be in everyone’s interest.

Lord German: My Lords, perhaps I could follow the point that my noble friend and the noble Lord opposite have just raised in respect of the same document. Box 2.A on FCA standards requires the people delivering the service to have a range of skills, which are numbered i to viii. I shall refer to a report last week in a newspaper that prints on pink paper, in which it was trying to seek from Citizens Advice and the Pensions Advisory Service the qualities of the people that they would employ. The report in the Financial Timesthat I am quoting from says:
	“Citizens Advice said details of where the”,
	agents and case workers,
	“would be deployed throughout its … bureaux … were still being finalised. However, it conceded that consumers could be required to make a further appointment if their questions could not be answered during their … guidance sessions”.
	That raises two separate issues: one is the quality and skills of the people who are delivering the guidance service, and the other is whether Citizens Advice is on side with the idea of delivering it in one go. The comment seems to suggest that its people may not have answers to the questions that are being raised by those people seeking guidance in their first interview. I wonder whether the range of flexibility on the two is at all appropriate.

Lord Newby: My Lords, we are keen to make sure that by the time people have been through the guidance process, they are able to make the best decisions for themselves. As I say, we hope that that will be possible in the vast bulk of cases first time around.
	I think that what will happen in giving guidance in this area, as happens elsewhere, is that there will be a number of very special cases, but the vast bulk of people will have the same issues as others. The CAB, which after all has to give advice on the whole benefits system, which if anything is even more complicated than the pensions system, has a proven track record of developing the skills of people, and is very good at this—while this is, of course, what the Pensions Advisory Service does.
	So we are confident that there are going to be well qualified people. We are building flexibility into the system—partly by having three ways of accessing it and partly, as I say, by, in exceptional circumstances or in a minority of circumstances, allowing people to go back—and we hope we are going to make sure that at the end
	of the day people will all have the degree of guidance that they need, relevant to their needs, to enable them to make well informed decisions.

Lord Bradley: I thank the Minister for his comprehensive reply, particularly when he said that the Treasury would be keeping its mitts all over the service. I assume that that was meant to be reassuring.
	I note that he said that he thought the BBC had got the story wrong today about flat-rate pensions, and I listened with great care to his explanation, which we will need to reflect on very carefully. It is vital that people are clear about what their pension income will be when they are making plans about their whole-pot retirement income. I hope that when I read his response, it will be clear that that information will be available to people well in advance of them taking advice from the CAB, the Pensions Advisory Service or whatever source they may choose, so that they can rely on the figures provided to them by the Pension Service.
	The report out today identifies a sum of £35 million. I accept that it is impossible to be very accurate about proposed take-up, but it is still not clear to me where in the range between 2.5% and 92% the £35 million is placed. I welcome the assurance that wherever it is placed, no one will be denied access to pension advice through lack of resources for those providing it.
	The Minister said that the training will be “adequate”. We are seeking an absolute assurance that it will be of the highest quality. I recognise that Citizens Advice deals with very many complex issues. It will often have specialists in its offices who deal with particular aspects and services. Depending on the volume of uptake of pension guidance, we want to ensure that everyone within Citizens Advice who is expected to provide guidance is of the highest quality—not just of adequate quality—and understands all the implications of what the Minister rightly admitted is a very complex landscape to which we are moving.
	There are still a number of issues to be considered. As I said in my opening remarks, we need to reflect further on the information that has been provided by the Treasury today. With the proviso that we may continue this debate at a later stage, I beg leave to withdraw the amendment.
	Amendment 30 withdrawn.
	Amendment 30A
	 Moved by Lord Bradley
	30A: After Clause 47, insert the following new Clause—
	“Pensions flexibility: impact on government revenues
	(1) The Chancellor of the Exchequer shall, within a period of 2 years from 6 April 2015, publish and lay before both Houses of Parliament a review of the impact of pension flexibility on government revenue, with particular reference to opportunities for tax and national insurance contributions avoidance.
	(2) The information published under subsection (1) should include an assessment of the impact on—
	(a) the use of salary sacrifice arrangements;
	(b) income tax receipts; and
	(c) national insurance contributions.”

Lord Bradley: My Lords, the two amendments in this group are intended to ensure that the effects of the pension flexibilities on the public finances and savers are adequately monitored by the Government. Their purpose is to ensure the publication and proper analysis of the information and that it is placed in the public domain to ensure transparency.
	I shall speak first to Amendment 30B, which requires the Treasury to produce a review of the effects of the pension flexibilities 18 months after they are introduced. This reflects the question we need to consider around the guidance guarantee and wider issues of pensions flexibility. We support the introduction of pension freedoms and flexibilities, but we want to ensure that they are done in the right way and that consumers are adequately protected. However, the pace at which the reforms are being brought forward leaves open considerable concern about the effects of the rollout. On Report in the other place, the Minister said:
	“The Bill was originally much shorter and obtaining the approval of, originally, the Government to bring it forward took place before the Budget … as we are in the final Session of a Parliament, everything has been on an accelerated timetable”.—[Official Report, Commons, 25/11/14; col. 804.]
	The pace at which the wider pension flexibilities provided for in this Bill and in the Taxation of Pensions Act have also lead to concerns among a number of other interested parties about whether the Government have fully bottomed out the policy and whether the rollout will go exactly as they are planning. A recent report in the Financial Times said that a lack detail about the reforms has left the industry concerned that they were at risk of failure. The chairman of the National Association of Pension Funds said:
	“There are 4.2 million savers over the age of 55 who from next April will have the right to ‘choose’ how they take their retirement savings”.
	He also said that,
	“this lack of detail—this lack of clarity—is severely limiting our opportunity to get things right for our members … and it’s increasing the risk of failure”.
	I point this out by way of background to show that, come April, there will still be a lot of work to do in reviewing the effects of the changes. The details of this amendment enable the Government to do just that. Conveniently, they will be along the lines of the test that we have already set out for these reforms: they should be fair; there should be decent products for low and middle-income savers; and the reforms should not result in extra pressures on the public finances.
	The ongoing position of annuities is one such matter that needs to be considered. For some people, annuities will remain an attractive product because of the security they provide. The Treasury have recognised that this is the case. Therefore, if the market for annuities were to suffer some major change, and perhaps products that were good value in the first place were no longer then available, that would be something for this House to consider carefully. This is why the amendment requires a review to consider that matter.
	Noble Lords will also be able to see that a review would be required to conduct an analysis of the cumulative effect on the revenues of the Treasury. Our other amendment on this point is focussed on the potential effects of salary sacrifice arrangements. It is also important
	to consider the possible costs that the state may end up having to provide. I am not aware of any Treasury analysis of this. The Minister may well want to correct me on this and I am happy for him to do so.
	Further, we still do not know how this will interact with changes to social care. In its written evidence to the Committee on the Taxation of Pensions Bill, the Association of British Insurers expressed concern that,
	“a continued focus on early access at the age of 55 means that there may be barely enough in the pension pots of some savers to cover their near-term retirement income needs, let alone enough left to stretch to care costs in older age”.
	We have also seen a recent report in which it is anticipated that pension withdrawals of this nature are set to rise by £6 billion above what the Government currently estimate. The charity Age UK warned last week that significant numbers of people could run out of cash in later life by withdrawing funds under the new plans unless tougher safeguards are in place.
	We do not believe that the Government have conducted sufficient analysis of the potential impact on the social care landscape. We also believe that there has been a disproportionate focus on the new freedom to access pensions early, and to take money out, which was not previously possible, as I have just alluded to. That is why we are calling on the Government to publish a review setting out the distributional impact by income decile of the reforms in the Bill. It is also unclear what effect having access to flexi-access pensions will have on means-testing for social care. I am not sure that the Government have the answer to this yet, but I would be grateful if the Minister could tell us what effect an amount of money that exceeds the means test level in a flexi-access draw-down account would have on the individual’s liability. As I have already pointed out, that money may be expected to last until death, as an annuity would have, but it may be accessible in a way that capital sitting in a bank is. Will that meet the means-test criteria or not?
	Just a few months from the changes coming into effect, there are clearly still a number of unanswered questions. That is why our amendment also covers a proper behavioural analysis of consumers in the light of the new freedoms and flexibility. At this point, may I also ask the Minister a question about access to funds? Is the report in the Sunday Times correct that the Minister in the other place is considering whether someone who has already taken an annuity may be able to buy themselves out of that so that they can be included in the new flexibilities and freedoms?
	The other amendment in this group requires the Secretary of State to produce a report on the revenue impact of the changes contained in the Bill and the Taxation of Pensions Act. Taken together, there is the potential for the Government to lose a great deal of revenue. As a result, we want to probe the impact that this is likely to have on the figures that the Government have presented in the Budget and in subsequent reanalysis. The main issue at the core of this is so-called salary sacrifice, a potential tax effect first highlighted by John Greenwood in the Telegraph, whereby someone over 55 pays a large part of their salary into their pension pot to avoid paying national insurance and income tax. The Budget freedoms would then make it possible for them to flexibly access their money through
	their pension fund, saving them and their employer a potentially large amount of national insurance. Some 25% of what they access will be tax-free and the rest will be charged at their marginal rate of income tax. This does not appear to have been the Government’s intention, and steps have been taken to try to prevent this. An annual contribution allowance of £10,000 a year for anyone who is accessing pension benefit restricts the possible tax leakage but does not prevent it. The reduced £10,000 limit is activated only after the pension has been flexibly accessed for the first time. As explained by the Association of Accounting Technicians:
	“In the first year, before the £40,000 allowance is lost, individuals over the age of 55 will still have the scope to save … NI on the full £40,000, provided they have the necessary earnings, less their existing pension contributions. Where an individual flushes (passes) an extra £30,000 through pension rather than drawing salary they will achieve a saving of £3,600 in employee NI, more than £1,500 in income tax and, also, £4,140 in employer NI (13.8%) in the first year. A total loss to the public purse of £9,240. The ‘Freedom and choice in pensions’ rules mean this money can be withdrawn immediately if an individual is over 55. This fact means that there will not be clear distinction between salary and pension for this age group”.
	Questions remain for the Minister to answer over, first, whether that possibility was adequately taken into account before the change was announced and, secondly, whether the revisions made since then are sufficient. For instance, the Government’s revised figures that take into account the changes made since the Budget forecast a loss of £35 million in the first year, and then £25 million for years after that. However, if we are to assume that the annual allowance reduces the potential for tax leakage, why do the revisions forecast a loss? The only conclusion I can draw is that the initial figures did not take into account the potential for salary sacrifice. Can the Minister confirm that this is the case?
	It may be the Government’s intention to introduce a more stringent allowance, in which case the £10,000 annual allowance was in fact a relaxation of the rules. However, that would appear to conflict with the Government’s statement that salary sacrifice was not intended to be part of the reforms. If the intent was an annual allowance of zero once the pension has been accessed, what analysis did the Government conduct that persuaded them to change it to £10,000, and can they provide it to Members of this House before Report? It is therefore an issue that needs to be kept under active review, and the Government should report to Parliament on the effect of this matter.
	As I have said, the purpose of our two amendments is to create clarity and transparency. As my honourable friend Cathy Jamieson said in the other House:
	“It is fair and sensible for us to ask that the new clause is included in the Bill because it would ensure that the Government did not simply monitor quietly in the background, waiting for something to go wrong, but proactively looked at all these areas and then brought further information to Parliament so that we could consider how best to do things in the future and remedy any unintended consequences or loopholes”.—[Official Report, Commons, Taxation of Pensions Bill Committee, 20/11/2014; col. 123.]
	That is the purpose behind our review, and I hope that the Government will accept the amendment. I beg to move.

Lord Hutton of Furness: My Lords, there has been a great deal of rhetoric surrounding this Bill. Some of the claims for the Bill may be far-fetched, but in one respect they probably are not. Many people have claimed that the reforms in the Bill constitute the biggest shake-up of our pension system for 100 years. If that is true, it is incumbent on the Government to have a clear plan—rather as my noble friend has indicated—for keeping Parliament abreast of the impact of those changes and reporting appropriately on it. None of us knows at the beginning of the extraordinary journey on which we are embarking what will happen and what will be the consequences of giving pension savers these significant new freedoms and flexibilities. It is quite likely that these are responsible people. They have been saving in workplace schemes, in some cases, for decades. Perhaps they are not going to blow their pension pots in a reckless spending spree at the end of their working lives. I tend to agree with that, but we simply do not know. Whereas giving choices is a great policy and one that I can support, it competes with another policy that has similar standing: that is, we must ensure that people approach and enter retirement with enough income to meet their lifestyle requirements.
	As has been said by many others in the course of this debate and in another place, these two policies are, to some extent, competing with each other through the Bill. My noble friend’s amendment is really seeking to do one important thing, which is to ensure that there is a proper appreciation of the risks inherent in this approach to the new legislation and a willingness to keep Parliament informed of them. If we get this wrong, not only are we going to impoverish future generations of retirees, but there is, as we know, some risk that the costs of that will fall back on to the shoulders of taxpayers. Either of those two outcomes would be a terrible result of these new freedoms and flexibilities which, in principle, I strongly support.
	I hope that the Minister will be able to respond positively to my noble friend’s amendment. I suspect he will say that there is something wrong with the drafting of the amendment. We have all been there before and we know how this process unfolds. If he is not prepared to accept the amendment I hope that he will at least give the House some indication of what reporting the Government are planning to embark on so that future legislators will be able to look back at the detail of this legislation and conclude at some point whether it is working or not. If it is not working, we will have to change it. If it is working, we will all celebrate one of the great reforms of the Government. However, it is clear at the moment that there is no indication, either in the Bill or elsewhere, of what plans Ministers have to keep Parliament abreast of the impact of these changes, given their significance and importance. It is necessary that we hear from the Minister today what the Government’s plans might be.

Lord McKenzie of Luton: I will speak in favour of my noble friend’s amendment and address two points. The first is the point my noble friend raised about tax leakage and the risks of salary sacrifice arrangements. I draw the Minister’s attention to Clause 54, which looks at the issue of independent advice and provides,
	not unreasonably, that that will not be a taxable benefit. However, it precludes it from that exemption if it is the subject of a relevant salary sacrifice arrangement, which is defined in the Bill. Rather than rely on a reduction in the annual allowance as, seemingly, the protection against salary sacrifice arrangements and tax leakage, why not simply adopt the same formulation that is adopted in Clause 54 by precluding salary sacrifice arrangements being available on appropriate definitions?
	My second point is to try to get a better handle on the Government’s assessment of behavioural change in the early years as a result of these flexibilities. We can do no better than to focus on the tax projections in the Red Book for March 2014 and the Green Book for the Autumn Statement because those must have been underpinned by some detailed calculations. I am not sure that we have seen that detail to date. I hope that the Minister will follow up in writing if he is not able to deal with all the detail today. How many cases of individuals taking lump sums or other drawdown arrangements rather than annuities are included in those estimates? That must have been the basis on which they were adduced. What is the additional aggregate taxable income expected each year until 2020? How many individuals are estimated to pay tax at higher rates as a result than they would under normal annuitisation? We probed this matter on Report in the Commons but did not get a reply. It would be helpful to have that detail as it would give us an understanding of the Government’s assessment of behavioural change and the number of people who will take more of their pension pots under these flexibilities than would if the annuity arrangements only had been available.

Lord Newby: My Lords, the two amendments in this group would require the Government to publish two reviews of the impact of pensions flexibility. I start by completely agreeing with the noble Lord, Lord Hutton, that these changes are welcome freedoms and flexibilities but, like all freedoms, they bring some risks that I hope, in a variety of ways, we shall be effective at mitigating.
	Noble Lords will not be desperately surprised to hear that I do not believe that these amendments are necessary. First, when considering new Clause 1 and the parts of new Clause 2 which relate to Exchequer revenues, it is important to note that in the Autumn Statement the Government published estimates of the Exchequer impact of the policy as a whole. These costings, which were certified by the independent Office for Budget Responsibility, cover all the changes made to the policy since the Budget as a result of consultation. The total impact of these decisions was set out in table 2.1 of the Autumn Statement document.
	To ensure that the Government were being sufficiently transparent, the Financial Secretary to the Treasury wrote to members of the former Taxation of Pensions Bill Committee setting out these costings. I will now outline them for the benefit of the Committee. Further detail on how these costs were calculated is set out in the policy costings document published alongside the Autumn Statement. However, in the letter sent by the Financial Secretary to the Treasury to the members of the former Taxation of Pensions Bill Committee, it
	was also explained that the costings published as part of the Autumn Statement were based on the same central assumptions that underpinned the costings published at the Budget. Since the Budget, the Government have explored in more detail two aspects of the policy that affect this costing, which takes us to a point made by the noble Lord, Lord Bradley, about the increased cost of salary sacrifice and the increased cost of welfare as a result of the reforms. The Government have produced costings for these, which have been scrutinised by the OBR. In line with standard practice, these are accounted for as changes to the forecast and are not therefore outlined in table 2.1 of the Autumn Statement document.
	Given the concern that noble Lords have expressed, it may be helpful if I detail what those figures are. The revisions to the forecast to account for salary sacrifice, which take account of further discussions and considerations since the Budget, are £35 million in 2015-16, £30 million in 2016-17, and £25 million in each of the following three years. When the forecast was revised to account for the increased cost of welfare, the figures rose from £15 million in 2016-17 to £25 million in 2018-19 and 2019-20. The Government have therefore already published the information that these two new clauses are seeking on the Exchequer impacts of various aspects of flexibility, all of which have been certified by the independent OBR. The Government are committed to keeping the policy under review through the monitoring of information collected on tax returns and tax records. Additionally, HMRC regularly publishes data on tax receipts, which will reflect any impacts on the Exchequer. Any such impacts will be reflected in forecasts at future fiscal events and the Government of course keep tax policy under continuous review. Therefore, there is no need, in the Government’s view, for further reviews of the Exchequer impacts of the policy as the Government have already committed to keep these under review through the usual processes.

Lord Bradley: I am grateful to the Minister and thank him for his explanation of the figures. I want to be absolutely clear that my example of a person who transfers his salary into his pension pot and saves national insurance in the way that I have described has been fully taken into account in these figures.

Lord Newby: My Lords, I believe absolutely that they have. If I am wrong in that, obviously I will write to the noble Lord; but that is the purpose of having initially produced the figures on salary sacrifice and subsequently revised them.
	I turn to the other elements of the amendments. Amendment 30B also seeks to require that the Government review the distributional impact of pensions flexibility, no less than 18 months after the Bill takes effect. As set out during debate of the Taxation of Pensions Act, pensions flexibility does not have a direct consequential impact on household incomes. Distributional effects will be driven by the choices that individuals make about how and when to take their pensions. In addition, household income is not necessarily a reliable measure of pension wealth, particularly in the years immediately prior to retirement. It is possible that the impacts of this policy could be misrepresented if we were to review them only against the distribution of household income.
	Additionally, Amendment 30B would require the Government to publish behavioural analysis. The costing of tax policies often involves an assessment of the behavioural impact of the measure and, in some cases, the capacity for additional tax planning and avoidance behaviour. These assumptions and methodologies are, of course, certified by the independent OBR. However, as a matter of policy, the Treasury considers that making these detailed behavioural assumptions public can have the potential to affect the behaviour they relate to, and as such can be potentially detrimental to policy-making. The policy costing note published alongside the Autumn Statement explains how the costings have been calculated. This is in line with the principles outlined in the government document Tax Policy Making: ANew Approach, which was published alongside the June Budget in 2010.
	Amendment 30B would also require the Government to review any impact that pensions flexibility might have on the volume of annuity purchases. Data on the sales of annuities will continue to be available through other channels, such as the data published by trade bodies such as the ABI and publications by individual firms. Therefore we do not think that there is going to be any lack of this information being publicly available, so there is no need for a requirement in the Bill to achieve that.

Baroness Hollis of Heigham: My Lords, is the Minister saying that the information will be available to departments but that the Government do not wish to publish it because of the behavioural implications it may have, or is he saying that it is too soon to gather that information and therefore they will not actually do so? The problem with the second position is that this change is such that it is almost impossible to change policy direction once it is embedded because of the nature of the policy changes, which to my mind are extravagantly at risk. As a result, the Minister is denying Parliament the opportunity to make the modifications before that degree of risk is permanently embedded in public policy.

Lord Newby: My Lords, I was saying that the Government have made an assessment of behavioural changes and they have produced figures which take those changes into account. Therefore, there has been a full assessment of the behavioural changes as best as can be done in advance of the change coming into effect. As I said, it is Treasury policy not to publish those assumptions but that work has been done. In terms of the cost to the Exchequer of this policy change, the figures were published at the time of the Budget and were subsequently revised, as I set out, at the time of the Autumn Statement.

Lord Hutton of Furness: My Lords, presumably that information will be subject to freedom of information requests.

Lord Newby: That, my Lords, is an extremely interesting question to which I do not know the answer.

Baroness Hollis of Heigham: In that case, my Lords, the Minister is saying that we are being given the assumptions that go into the forecasts but we are not going to be given the information to see whether those forecasts are accurate.

Lord Newby: I am saying that in a whole raft of areas, no doubt under successive Governments, the Treasury has made behavioural assumptions. When I used to work in Customs and Excise, that was certainly the case when asking what would happen if the duty on whisky was put up. A whole raft of behavioural assumptions is made in policy-making and I do not think that it has been the policy to make those behavioural assumptions public. What obviously has been, and will remain, policy is to set out the impact of those behavioural changes. The noble Baroness shakes her head. Perhaps when she was a Minister behavioural assumptions were made available. My understanding is that that has not been the policy but I will go back to the Treasury and check.

Lord McKenzie of Luton: I wonder whether the Minister can help me. It seems to me that there is potentially a difference with behavioural change which is incidental to the fundamental policy issue. However, here we are talking about a system where the change and the data underlying the tax issues are absolutely fundamental—it is what the whole policy change is about. Just to be clear on that, the Budget Red Book for 2014 refers to extra tax in 2015-16 of £320 million, £600 million the year after, £910 million the year after that and £1.2 billion the year after that. I think we understand that work has been done on those figures and that the Office for Budget Responsibility has accepted them as realistic. However, as I understand it, the Government are not going to tell us the basis on which those figures have been derived. They are not going to give us the opportunity to make any judgment as to whether, ultimately, we support the policy.

Lord Newby: My Lords, I was simply saying that my understanding is that it is a long-standing convention regarding the behavioural assumptions that go into producing those figures. The only other thing I would say is that today we have seen another, very different, estimate of the costs. There is a very considerable degree of uncertainty about the figures at the moment but the Government made their best estimate at the time of the Budget and they amended it in the light of further consideration at the time of the Autumn Statement. They will obviously keep the situation under review as we see what people do rather than speculate about how the policy will work.
	The noble Lord, Lord Bradley, asked about the effects of the new policy and flexible access on eligibility for means-tested benefits—in particular, social care. The policy aim is to ensure that the decisions people make in choosing between taking their pension as income and keeping more of their pension as capital and drawing it out periodically do not significantly impact on how they are assessed for social care support and how their means are assessed for social security purposes. New statutory guidance and regulations
	under the Care Act were published on 23 October. They include details on the changing rules for care and support.
	In respect of social security, we announced a change in the rule for people above pension credit qualifying age who claim means-tested benefits. The notional income amount applied to pension pots which have not been used to purchase an annuity will be reduced from 150% to 100% of the income from an equivalent annuity, or to the actual income taken if that is higher, in line with the rules for care and support.
	The noble Lord, Lord Bradley, asked about unwinding annuities already bought. This is not government policy. It was a suggestion of my colleague Steve Webb, the Pensions Minister, in the context of future Liberal Democrat party policy. It was not a statement of government policy.
	I am sure that there are other specific issues raised by noble Lords in this debate to which I have not given a full answer. I will read it again.

Lord McKenzie of Luton: I promise not to delay the Committee any longer. However, I would just refer to the point about why the Government have not taken the opportunity to specifically deny the benefit of the flexibilities when there are salary sacrifice arrangements. They have done it in another small part of the Bill, so it is technically achievable. Why have they eschewed that—to allow at least some element of salary sacrifice arrangements to have the tax benefits that they are designed to?

Lord Newby: My Lords, one thing I have not responded adequately to—and I am not sure whether what I am going to say will adequately answer the noble Lord’s point, but I will write to him if I do not—is about salary sacrifice and the question about the £10,000 allowance, which the noble Lord, Lord Bradley, and others, referred to.
	The £10,000 allowance is, we think, a sensible middle way to allow the majority of people the flexibility to withdraw or contribute to their pension as they choose from age 55, while also ensuring that individuals do not use the new flexibility to avoid paying tax on their current earnings. However, there are clearly circumstances in which it will be in an individual’s best interests to gain access to part of the pension pot early—at 55 or 56—while by the time they are 60 their circumstances have changed and they can then start contributing again to a pension. We did not want to deny that entirely. Equally, as noble Lords have said, we did not want individuals recycling money out of pension pots just in order to avoid tax. It is therefore a pragmatic compromise figure which we think strikes the right balance.

Lord Bradley: I again thank the Minister for his detailed response. In relation to buying out annuities, the Minister is right—the article in the Sunday Times did state that Steve Webb was a Liberal Democrat. However, it also stated that he was the Pensions Minister. I am sure that this is part of the tensions of coalition as we head towards the general election.
	I am grateful for the support for this amendment from the noble Lords, Lord Hutton and Lord McKenzie, both of whom are experts in this field and bring great value to our deliberations. I am grateful to the Minister for clarifying some of the points regarding social care, although again I suspect that there may be further devil in the detail that we may debate further this afternoon.
	The Minister’s response made the most compelling case for why we need the review brought back to Parliament with all the information gathered in a coherent and digestible way. In his response to our amendment he identified various sources of information in various departments, and it would take great expertise to beaver away and gather all that information into a form that enables enlightened and informed debate, not only in this House but in Parliament generally, and—in terms of transparency—for the public to understand fully the implications of these amendments.
	We need to look carefully at the way in which information is gathered, disseminated and presented to Parliament. This amendment was a very good start for the revolution that is likely to take place in pension provision and how freedoms and flexibilities are used by the public. For today, however, I beg leave to withdraw the amendment.
	Amendment 30A withdrawn.
	Amendment 30B not moved.
	House resumed.

Nigeria
	 — 
	Statement

Baroness Anelay of St Johns: My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my right honourable friend Hugo Swire to an Urgent Question in another place on Nigeria. The Statement is as follows:
	“The Boko Haram terrorist group continues to wreak havoc across north-east Nigeria. Many colleagues will have seen the press reports over the last week highlighting their latest sickening attacks. Hundreds of people are believed to have been killed in the town of Baga in Borno state last week as Boko Haram continued their bloody insurgency campaign. Suicide bombings in urban areas are also a common feature of Boko Haram’s tactics. This weekend we saw another heinous example in the Yobe state town of Potiskum.
	These attacks are just the latest example of the insurgents’ reign of terror. We believe that last year more than 4,000 people were killed by the group in north-east Nigeria. The United Nations estimates that more than 1.5 million people have been displaced by terrorist activities and at least 3 million have been affected by the insurgency.
	The abductions of the Chibok schoolgirls on 14 April last year shocked the world and highlighted the mindless cruelty of Boko Haram. The group deliberately targets the weak and vulnerable, causing suffering in communities
	of different faiths and ethnicities. It is almost certainly the case that attacks by Boko Haram have killed more Muslims than Christians.
	2015 is an important year for Nigeria’s future. Presidential and state elections will take place in February. It is crucial that these are free, fair and credible and that all Nigerians are able to exercise their vote without fear and intimidation. As Minister for the Commonwealth, I responded to the right honourable Member for Kirkcaldy and Cowdenbeath, the former Prime Minister, on behalf of the Government in the last debate in this House on this subject. I am grateful to the honourable Member for Brent Central for asking this timely Question. It will allow Members from across the House to give this important issue the attention it deserves”.
	My Lords, that concludes the Statement.

Baroness Morgan of Ely: My Lords, despite the shocking events in Paris last week it is essential that the world does not lose sight of the terrorist attacks happening elsewhere in the world, most notably in Nigeria. We were horrified by reports that up to 2,000 people were killed in northern Nigeria last week following a series of deadly and brutal attacks carried out by Boko Haram extremists. Terrorism is unacceptable wherever it takes place.
	As the Minister has highlighted, this follows months of violence across northern Nigeria, with killings, mass abductions and attacks against innocent civilians. These attacks and this brutality have been condemned around the world. While many people have rightly praised the moving solidarity across Europe in recent days, there can be no doubt about the need for solidarity across continents in the wake of these appalling attacks. The world must not simply stand back and tolerate Boko Haram’s brutal campaign of violence.
	I emphasise that here in the UK there is cross-party support for Britain to continue to provide support, alongside our allies, to the Nigerian authorities in their efforts to tackle Boko Haram. I ask the Minister to update the House on the level of that support and to confirm whether there have been any additional requests for British advice and expertise from the Nigerian Government. Is the Minister confident, in the light of the violence, that fair presidential and state elections can take place in February? Can they be fair?
	The Minister referred to the appalling kidnappings in Chibok which brought much needed global attention to the security situation in northern Nigeria and the vulnerability of civilians—in particular women and girls—at the hands of Boko Haram extremists. Let us not forget the meaning of Boko Haram: “Western education is forbidden”. The recent testimonies collected by Human Rights Watch from victims who were able to escape show the appalling extent of the violent and brutal conditions in the Boko Haram camps where women and girls are still being held. Can the Minister provide the House with an assessment of the current plight of the girls who have been kidnapped by Boko Haram, and what discussions her department has held with the Nigerian authorities on working to secure their release?
	Stabilising Nigeria is essential as its population is expected to surpass that of the United States by 2050. According to UN projections, it could be the world’s third most populous nation by the end of this century, and Boko Haram risks becoming a regional threat to peace and stability. Can the Minister update the House on what discussions the Foreign and Commonwealth Office is initiating with regional and international partners to co-ordinate international action on this issue?

Baroness Anelay of St Johns: My Lords, I am grateful to hear the noble Baroness repeat the support of the Opposition on this matter for resolving what is a horrific situation where we have an insurgency that does not differentiate between good and evil; beheading people seems to be of no account, regardless of who they are. We have read horrific descriptions of what has been happening over the past week. I know that the noble Baroness gave a particular figure. I would say that the figure for those who have been butchered over the past week is not actually confirmed, but clearly there have been significant massacres across northern Nigeria. The area affected, of course, is about the size of Belgium—it is a vast area.
	The noble Baroness asked several questions in particular about the activity of the UK. She asked several questions, so perhaps I can be fairly brief in answering each one. We have continued to give our commitment to United Kingdom aid. We work through the UN Central Emergency Response Fund and the European Commission’s Humanitarian Aid and Civil Protection department. DfID has provided £1 million to support the Red Cross to provide humanitarian assistance in the north-east of Nigeria—the particular area to which the noble Baroness referred. In addition, we are working through existing education programmes to ensure that schools are safer in the eight other areas of northern Nigeria. The noble Baroness asked what we are doing in particular for children and rightly reminded us of what Boko Haram originally meant. It has gone a long way from that. This is a group of people who want power and they will kill anybody in their way—regardless of who they are.
	Since 2011, 60% of DfID’s budget has been spent in the north of Nigeria, and a major focus of that work has been with regard to women and girls. Particularly, we have worked on education projects throughout the area. I am happy to talk to the noble Baroness about the detail of that later, but I am conscious of the nature of an Urgent Question. She rightly asked, of course, about the Chibok girls and the situation there. I again remind the House that as a Government we are concerned with more than those Chibok girls, serious as it was that they were seized. We have heard stories of seizures and kidnappings across the period since then as well—of boys as well as girls. We have continued our talks with the Nigerian authorities in order to be of as much help as we can, particularly in the provision of surveillance assets and intelligence expertise.
	The noble Baroness asked about the position with regard to elections. Clearly, a security situation where people feel afraid to go out and vote is the last one you want when something as important as a presidential
	election is approaching. We are doing all we can to work with the Nigerian army to provide technical assistance, expertise and training. We are also working through DfID as hard as we can to provide some hope and expectation that there may be some way of elections going ahead that are free and fair, and open to all.

Lord Hussain: My Lords, the activities of Boko Haram are barbaric and brutal, as we know. Would the Minister not agree with me that it is just as brutal as the Taliban, which attacked children in Pakistan in recent weeks? More than 140 children were killed by the Taliban, and its activities are, no doubt, just as bad as those of al-Qaeda and Daesh in different parts of the world. Would the Minister tell the House what Her Majesty’s Government are doing to help Pakistan to protect its schoolchildren from such brutal attacks by the Taliban in future?

Baroness Anelay of St Johns: My Lords, it is the custom that, in answering a Question, we are confined to the particular country under consideration. I can say to my noble friend that, of course, terrorism is wrong per se. He will know our absolute commitment to ensuring that it is rooted out in whichever country it may be.

Lord Harries of Pentregarth: Boko Haram has been creating havoc in north-eastern Nigeria for years now, yet Nigeria is a hugely wealthy country with a large army. Can the Minister shed any light as to why the Government in Nigeria seem so helpless in dealing with this situation? In an earlier reply, she mentioned the help the British Government were giving in terms of aid and intelligence. Could she say a little more about what help we might be able to give the Nigerian Government in terms of military strategy, so that they can deal with this much more forcibly than they are at the moment?

Baroness Anelay of St Johns: I entirely agree with the noble and right reverend Lord’s assessment of the situation. The economy of Nigeria is the largest in Africa currently, and if it were not so beset by corruption and by difficulties in administration—if I can put it that way—Nigeria would have a thriving economy. It clearly does not. It spends 20% of its budget on security, yet the security forces have great difficulty in facing and containing Boko Haram. We have ensured that there is technical assistance and advice; indeed, we have ongoing projects with the army to ensure that it can build up resilience over the coming years to try to defeat Boko Haram and that, having done that, Nigeria has an army capable of preventing a recurrence.

Lord Tebbit: Would my noble friend not agree that what we are seeing is largely a continuation of the civil wars of the early 1980s in Nigeria, when the Hausas, who are mainly Muslim, were in conflict with the mainly Christian and pagan Igbos and Rivers people? This is now exacerbated both by the corruption of the Nigerian Government and the new spirit of the
	vicious Islamic group Boko Haram. Is there any help which we can sensibly offer to Nigeria, other than military help, to help its incompetent army defeat Boko Haram? Are we in any position to offer military help?

Baroness Anelay of St Johns: My Lords, we have made it clear that we are not going to become militarily involved in Nigeria with our own troops, but we have done everything reasonable to provide advice and assistance to the army there. We have ongoing projects to provide it with expertise and training. My noble friend referred in particular to the history of the area. However, Boko Haram is something new, not just in the utter viciousness with which it behaves but in the way that it is Muslim against Muslim—not Sunni against Shia but members of the same group against each other. These people have no thought about what one’s religion is. If you are in their way and they want your land, they will kill you.

Pension Schemes Bill
	 — 
	Committee (2nd Day) (Continued)

Schedule 3: Pensions guidance
	Amendments 31 to 33
	 Moved by Lord Bourne of Aberystwyth
	31: Schedule 3, page 65, line 2, after “scheme” insert “, or a survivor of a member of a pension scheme,”
	32: Schedule 3, page 65, line 3, at end insert “or survivor”
	33: Schedule 3, page 65, line 9, at end insert—
	““survivor” has the meaning given by section 74 of the Pension Schemes Act 2014.”
	Amendments 31 to 33 agreed.
	Amendment 34
	 Moved by Baroness Greengross
	34: Schedule 3, page 65, line 17, at end insert—
	“( ) The Treasury must publish an annual report on outcomes being experienced by people with flexible benefits.”

Baroness Greengross: My Lords, I will take all the amendments in my name together. At Second Reading, I welcomed the overall intention of the Bill, which includes the creation of a new type of pension scheme—a collective benefits scheme. Potentially, such schemes could provide individuals with a greater degree of certainty over the level of pension benefit they might receive. As they enter retirement, it could help them make better choices and informed decisions, but the accompanying new freedoms and choices for people also hold many greater risks. To understand these risks, people have to be very much better informed. If they are unable to manage their money effectively over what in this day and age can be a 40-year retirement, and if they are poorly advised or sold poor-value products, the impact on pensioner poverty more widely could be significant.
	We have a narrow window of opportunity to ensure that these reforms work as intended because currently many people at the point of retirement still have the security of defined benefit pensions. Even so, the Pensions Policy Institute, of which I am privileged to be the president, has highlighted that 41% of people who are now aged between 50 and the state pension age—2.3 million people—have no DB savings and so are heavily reliant on DC savings to support their retirement.
	On day one of Committee, the noble Lord, Lord Bradley, proposed a new clause on decumulation aimed at protecting savers who default into an annuity with the same savings provider. This was by providing safeguards for people who do not take advantage of the new flexibilities because, for them, an annuity remains the best product. It guarantees them a set income for the rest of their life. In his response to the noble Lord, Lord Bradley, the Minister reminded us that the recent FCA thematic review of annuities and the findings from its market study concluded that competition in the annuity market does not work effectively and consumers are not getting the most out of their hard-earned savings. These reports provided further evidence for the need for a route map through the annuity process for consumers, and the amendment moved by the noble Lord, Lord Bradley, would have established an independent annuity brokerage service to resolve this by providing scheme members with an assisted pathway through the annuity process, ensuring access to most annuity providers and minimising the cost. His amendment was withdrawn but perhaps we need to discuss this further because some sort of alternative navigation support across this fault line between guidance and advice must be necessary. Plainly, this is in the remit of the FCA, but the FCA itself has made it very clear that the supervision of guidance does not lie with it but with the Treasury, so there is something of a stalemate there.
	Last week’s debate also touched on the proposed role of the Pensions Regulator, as many of the annuities offered are bought by members of occupational pension schemes, using their defined contribution savings. These are provided by the FCA-regulated contract-based pension schemes. The Government, however, will define the exact role they see the Pensions Regulator playing in this busy landscape. I shall later come to how we might mitigate savers’ risks by having a second line of defence across all retirement income products.
	In their earlier Amendment 30 to Clause 47, the noble Lords, Lord Bradley and Lord McAvoy, sought to mandate the Secretary of State each year to produce a report on the effectiveness of the guidance under Schedule 3, which would include the number of people who have taken up the guidance, the number of those eligible to take up the guidance who did not do so, and the effectiveness of the guidance in preventing instances of consumer detriment through the purchase of inappropriate products. My Amendment 34 similarly seeks to ensure regular monitoring and reporting on the outcomes of these reforms for everyone affected, whether or not they access the guidance. In particular, this reporting should include outcomes such as the number of people cashing in their pension pots in their
	entirety and the number taking out draw-down or purchasing an annuity, all broken down by pension pot size. The guidance guarantee should be regularly reviewed to ensure that suitable information is there to make sure that people can make the important decisions that really suit their own needs.
	On Amendment 35, as I mentioned earlier, another pressing challenge that will have an impact from next April on those approaching retirement is the advice and information envelope, which will underpin the decision-making process here. This and my remaining amendments relate to the proposals for and the regulation of official guidance for people approaching retirement.
	Schedule 3 to the Bill places a duty on the FCA to create and regulate the advice and information part of the “freedom and choice” pension reforms in the shape of the guidance guarantee, which is a crucial part of these reforms. The noble Lord, Lord Newby, alluded to this in his response to the previous amendment, but my worry is that individuals are not aware of the existence of this guidance, and not obliged to seek it or to follow it if they find it. Many people will remain seriously ill informed, and, as we heard on day one, they may make the wrong decisions. We mentioned the Sunday Times article on this.
	In particular, Amendment 35 seeks to ensure that the guidance service provided under the new rules takes into account all potential sources of income in retirement, especially given that defined contribution pension savings make up a significantly smaller amount of an average saver’s total retirement income than housing wealth. Indeed, some estimates put the housing wealth of older people in the UK at £1.4 trillion.
	On Report in the other place, the Minister gave assurances that the FCA’s principle-based standards will require delivery partners to take into account various sources of income, including housing wealth, in the provision of guidance. I have reviewed, however, the near-final rules and standards recently published by the FCA in the annexe to its policy statement on retirement reforms and the guidance guarantee. I thank the Minister for very kindly making those available to us. I believe that these rules will need to be stronger if they really to better reflect the Government’s avowed intentions.
	I welcome the fact that Part 1 of the standards—Standard 20—stipulates explicitly what the guidance must contain, including requesting information about the consumer’s financial situation—for example, whether the person is a home owner or renter—and personal circumstances that are relevant to their retirement options. However, there is no explicit reference to levels of housing wealth. While we can all sympathise with the Government’s reluctance to overpromise on what these relatively limited guidance conversations can be stretched to achieve, the guidance session should act as a prompt for people to consider their options for retirement funding. It would be remiss if this did not include a full picture of people’s financial health.
	This amendment would ensure that the individuals providing the guidance service under the new rules were required to ask questions about other assets, including housing wealth specifically. I recognise that the guidance guarantee cannot and should not seek to
	replace regulated advice, but, as I have said, it should act as a prompt for consumers to consider their full range of options.
	Guidance also needs to cover interactions with lending. Research from Prudential found that one in six people planning to retire in 2014 will have debts. The main sources of debts are credit cards followed by overdrafts and bank loans, but they might also include mortgages. Age UK has found that while the proportion of older people with debt had fallen between 2002 and 2010, the average size of the debt had increased. Currently, lenders are unwilling to lend to older people and, in particular, to extend mortgage terms so that they are repayable after retirement. This could mean that more consumers have to repay debts when they reach state pension age. Many of those with a need to repay a mortgage post-retirement will have an interest-only mortgage. I received this information from Age UK and a lot of what I am reading now came from its very full briefings to me.
	FCA modelling predicts that just under half of interest-only mortgage holders whose loans mature before 2020 will have a shortfall between their mortgage and their expected repayment vehicle. In the near term, there is a peak of mortgages maturing in 2017 or 2018, many of which were sold as endowment mortgages in the early 1990s. Some of these shortfalls could be significant. The FCA estimates that a third of those with a shortfall will have a shortfall greater than £50,000. It would be a missed opportunity if people were not encouraged to consider those wider assets.
	In response to my question at Second Reading regarding the impact of any drawn down money on any subsequent means test for local authority care fees funding eligibility, the Government have said that money held in draw-down funds will be treated as providing notional income and will be treated consistently with annuity income; that is, it will be included in any such means test. I hope that more detail will be available shortly when the Department of Health publishes the draft regulations for care charging under the Care Act 2014, particularly if any such draw-down, despite having been spent, is retrospectively included under the intentional deprivation of assets rules. It is vital that the guidance guarantee makes the full implications here crystal clear.
	On Amendment 37, consumers, and therefore guidance, should also take account of the position regarding state pensions. Using your private pension to take up options such as deferring state pension or buying extra state pension could provide much more income than buying an annuity, unless it would affect means-tested benefits. For example, deferring a pension may provide a higher income when it is finally vested, so the individual’s current and future income, assets and liabilities need to be taken into account. Lenders will have to be much clearer on how they will treat small pension pots, and this clarity should be a key part of best-practice guidelines that balance the interests of borrowers and of lenders.
	Amendment 37 seeks to ensure that the guidance guarantee and financial advisers take state pensions and benefits into account when offering advice and support to people. For an individual retiring, using their private
	pension to take up options such as deferring a state pension or buying extra pension could provide much more income than buying an annuity, unless it would affect means-tested benefits.
	I turn to Amendments 39 and 40 together. Shopping around for income draw-down is likely to prove complex for many consumers. The Government really should consider introducing a cap on the level of charges for some products. However, it is not just about charges. Investment strategies will need to reflect the new flexibilities and cash held within a pension fund may actually lose money. For example, a money market fund held in a stakeholder pension has actually declined by 2% over the past five years. Both Government and regulators should ensure that scheme governance is strong and effective for the accumulation, saving and de-accumulation or income phases. These amendments seek to do that.
	The range and impact of poor value products could increase with the increasing complexity of products on offer after the reforms come into effect. As we heard on day one, further examples can be seen in the recent findings from the FCA following its review of the retirement income market which showed that many consumers in the past have missed out on a higher level of payments from their annuity. In some cases this was because consumers had not been told about better value policies they could have taken out. In addition, a report from Which? and the Pensions Policy Institute believes that income draw-down will become the norm, rather than the exception. However, the research found that none of the alternative products to conventional annuities is currently suitable for the mass market, due to the costs and investment risks involved. It is crucial that this type of situation does not continue when consumers are presented with a far wider array of products when these reforms come into effect next April.
	Building on the quality-standard idea, I believe that guidance alone will not be enough to ensure that everyone gets a good deal. The market has not served people with small to average-sized pension pots well in the past. Guidance should help many retirees make better decisions. I feel that the FCA needs to secure greater protection for individuals during the decision-making process, by including devices such as cooling-off periods and defaults. The problem is that, while the latter lie in the province of the FCA’s supervision, the guidance does not, so coherent co-ordination may prove difficult, especially as the FCA avows that it is not part of its consumer protection remit to do this.
	The Pension Schemes Bill Committee in the other place heard evidence from a range of expert witnesses, including Dr Ros Altmann, the Government’s business champion for older workers, and representatives from the Financial Services Consumer Panel. They all called for the requirement of a second line of defence to underpin the guidance guarantee to be imposed on pension providers by the FCA. A second line of defence regulation would require pension providers to check crucial factors at the point when consumers accessed their DC pension savings. Specifically, they would have to draw the customer’s attention to a range of known risks which could have a negative impact on people’s finances on retirement, including outliving assets, running out of money, not providing benefits for a spouse on
	death or missing out on additional income resulting from a medical condition or lifestyle factors. It would also require pension providers to offer a cooling-off period for people who ask to take out all their money in one go.
	As the consumer moves post-guidance into what the noble Baroness, Lady Drake, in last week’s debate called,
	“the purchase or decision activity which flows from that guidance”,—[ Official Report , 7/1/15; col. 366.]
	it is a pity that the FCA seems to have ignored these calls for a second line of defence requirement and has decided that it will simply rely on its supervisory role, which merely ensures that pension providers are required to signpost customers to the guidance service and to encourage them to use that service. That is not the complete solution, in my view. At a meeting on 17 December, the Work and Pensions Select Committee pressed the FCA forcefully on the absence of a regulatory backstop or a second line of defence for consumers, who will first come into contact with the reforms in April. However, no clear answers were forthcoming on this point, which is very concerning, given the growing calls from Age UK, the ABI and others for the FCA to include such a regulation. While I understand that the guidance is not intended to address the specific situation of every consumer—that is the purpose of advice—no one wants the costs of shopping around to mean the imposition of unnecessary additional costs on either some schemes or members. I still think that I am on the side of the Select Committee, which at this point of the proceedings wondered why, rather than emphasising the demarcation issues here, the FCA,
	“would not introduce a conduct rule around the second line of defence. Why not?”.
	Instead of providers,
	“asking customers whether they have taken the guidance and then asking them again, require them to ask those specific few questions about tax, about health—those questions that are needed to make sure the person has made an informed decision”.
	This is such a high-stakes decision, with lasting consequences for individuals and their families, that I think some additional measures are necessary. Indeed, similar measures already apply in the case of many routine and far less significant purchases that people make. Will the Minister assure us that both the Treasury and the FCA will be made to work more closely together to ensure that a seamless information and guidance process comes into existence, for the benefit of all consumers? I beg to move.

Lord Best: My Lords, my name is down in support of these amendments from the noble Baroness, Lady Greengross. I declare an unremunerated role as a member of the Equity Release Council’s advisory board, and I speak particularly as chair of the All-Party Parliamentary Group on Housing and Care for Older People. I shall concentrate on the interrelationship of advice about pensions and advice about the use of capital assets to fund one’s retirement.
	I strongly support the case made by the noble Baroness that the advice provided by Citizens Advice and the Pensions Advisory Service, under the guidance
	guarantee introduced by the Bill, should ensure that an individual’s assets, particularly their housing wealth, are taken into account properly. The resources in an individual’s pension pot—their defined contribution pension savings—account on average for around £20,000, which represents only some 4% of their total wealth, compared with over £270,000, 55% of their wealth, which is held in the equity of their home after deducting any outstanding mortgages. Four per cent of wealth in their pension savings and 55% in their property—talk about the elephant in the room. It seems essential that that in these important advice sessions attention is drawn, where relevant, to the individual’s wealth bound up in their property, which of course can be turned into cash, either by downsizing to a cheaper home or through an equity release product.
	When thinking about buying annuities or choosing other investments, it is extremely important to consider holistically one’s wealth as a whole. The DWP Minister in the other place Steve Webb has agreed that advisers, under the proposed arrangements as spelt out in the near-final version of his department’s rules for giving guidance, should ask whether the consumer is an owner-occupier or a tenant and should ask, perhaps a bit vaguely, about personal circumstances. However, the rules for this interview do not include any explicit reference to housing wealth.
	Amendment 35 would make clear that the guaranteed guidance from Citizens Advice and the Pensions Advisory Service should include prompting individuals to look carefully at their housing assets. Without the guidance pre-empting the professional advice of an independent financial adviser, this should be the moment when the interplay of housing and pensions gets aired. Those fulfilling the guidance guarantee should help consumers ask the right questions of an independent financial adviser.
	The All-Party Parliamentary Group on Housing and Care for Older People, supported by the think tank Demos, published a report at the end of last year on affordable downsizing. It called for new measures to assist those in their extended middle age who want to move from family housing to a tailor-made apartment or bungalow. Such moves, as well as preventing and pre-empting problems in later life, have very positive financial effects with savings in fuel bills, maintenance costs, garden upkeep and the rest. We also noted the complexities involved in the financial aspects of trading down or equity release. We called for a “help to move” package comprising access to equity loans for movers, as for young people through the Help to Buy scheme, plus concessions on stamp duty, which were partly answered by the Government’s reforms of that tax, and, very importantly, guaranteed guidance on the financial arrangements, piggybacking on the pensions guidance featured in this Bill. These amendments would use the guidance guarantee that covers people’s defined pension contributions to draw attention to bigger questions relating to other assets, particularly housing wealth. They would make the guidance sessions much more meaningful in a country where 14 times more of our wealth in older age is tied up in our properties than in our pension savings. I support the amendments.

Lord German: My Lords, I rise to support the remarks of the noble Lord, Lord Best. In doing so, I declare my interest as an unremunerated member of the advisory committee for the Equity Release Council. I am, I hope, still in extended middle age, which is a new term that I fully endorse.
	Housing wealth, along with other assets, means that the guidance is crucial given the disparity between the amount that people tend to have in a DC pot and their housing wealth, which on average is more than 10 times as much. That is a considerable amount of money or resource which people will need to take into account. The FCA standards, which were helpfully published this morning by the Treasury, state that:
	“In terms of content, the standards require that the guidance session must … request information about the consumer’s financial and personal circumstances that is relevant to their retirement options”.
	That requires the adviser who is going to take people through the guidance session to ask them for information about their housing wealth, but it is not explicit in the standards, and while we know that they are nearly finalised, there is time for the Treasury to make them more transparent about what is required. Because of the relationship between the two amounts of money, the instruction ought to be clarified, perhaps not in the document but in the training so that it is always an issue which people take on board. Will the Minister indicate whether the sentence in the FCA standards set out in the document produced this morning by the Treasury implies that housing wealth, savings and investments will be taken into account? Will he consider making it more explicit in the information that is provided to the consumer and to those providing the guidance?

Baroness Hollis of Heigham: My Lords, I would like to ask the Minister a question which is triggered by the important issues raised by the noble Baroness, Lady Greengross, and the noble Lord, Lord Best. However, I want to look at it from the other way round, which is the situation of someone who is 55, is on housing benefit, and has £20,000 locked away in a small pension pot. At the moment, if you have capital of more than £16,000 and you are pre-retirement, that is an absolute block to any further income-related benefits. Different rules apply when you come to retirement. The assumption throughout is that you can access your pension only at the point of retirement, when different rules apply. What will happen now? Can the Minister help us on this? The rules are that if you have capital that you could get at if you applied for it, you are treated as having that capital. While it was tucked away in a pension and not accessible until you reached 60 or 65, you could not have access to it and so it did not affect your entitlement. But in future you will be able to access your capital in such a way that, under the Housing Benefit Regulations 2006, Regulation 49(2), because you can access your capital, you are treated as though you have that capital, which would therefore automatically cut you off at £16,000—you have £20,000 in your pot —from any access to housing benefit. Can the Minister clarify how this will work in the future?

Lord Newby: My Lords, I am grateful to the noble Baroness, Lady Greengross, for giving me the chance via the debate on these amendments to address a
	number of important issues in respect of the guidance service. I turn first to Amendment 34. This seeks to require an annual report on consumer outcomes. As I said in the earlier debate, in terms of the overall policy of greater flexibility, the Government are committed to keeping the policy under continual review, including through the monitoring of information collected on tax returns and tax records. This was confirmed in the debates in the other place late last year on the Taxation of Pensions Bill, which it then was.
	How the market evolves to respond to consumer needs is where the regulators come in, in particular the Financial Conduct Authority. As I mentioned earlier in addressing the amendments tabled by the noble Lords, Lord Bradley and Lord McAvoy, the FCA has a strategic objective to ensure that the markets function well and a specific operational objective to ensure that consumers of financial services are appropriately protected. The FCA has recently published the provisional findings of its Retirement Income Market Study. In this report, the FCA committed to monitor the retirement income market, and if consumers appear not to be getting the support or products they need or if competition is failing to drive good value, it will make whatever intervention is appropriate. The noble Baroness will, I hope, be reassured by the specific commitment of the FCA to monitor consumer outcomes,
	“we will monitor the market to track developments to assess whether these risks arise and if so, the impact on consumer outcomes”.
	I am also grateful for the related amendment from the noble Baroness which seeks to expand the new duty of the FCA to protect consumers using guidance through its role in setting and monitoring standards for the provision of pensions guidance by designated guidance providers. The noble Baroness raised again the question asked earlier about the supervision of guidance and the respective roles of the FCA and the Treasury. To be clear, the FCA has the responsibility for supervising designated guidance providers’ compliance with the standards which it has set. While the Treasury itself is not a designated guidance provider, it has committed in the update published today that it will fully comply with the FCA standards as far as that is appropriate, because the Treasury is responsible for the online channel.
	More generally in respect of the FCA and its powers, the noble Baroness will know, I am sure, that the Financial Services Act 2012 gave the FCA wide-ranging product intervention powers. For the first time it is equipped to ensure that new retirement income products are designed and sold in a way that does not cause detriment to consumers. As for assessing the consumer outcomes resulting from the guidance service specifically, with which Clause 3 is concerned, I can assure the noble Baroness, as I have already the noble Lords, Lord McAvoy and Lord Bradley, that the Government are committed to a full programme of monitoring and evaluation of the guidance service, which will encompass the delivery partners’ provision to ensure that the service is operating effectively and successfully in supporting people in their retirement decision-making.
	I turn now to other aspects of the noble Baroness’s amendments. I can reassure her that the guidance service will ensure that consumers consider relevant issues related to pension decisions such as state pensions, debts and other assets, wealth and income. The Government are committed to ensuring that individuals are equipped and empowered to make informed decisions about how to use their pension savings which take account of their wider circumstances. But the Government believe that it is right that the content of the guidance session is set out in FCA standards rather than in legislation. This will enable the content of the session to be more freely adapted to consumer needs in response to the ongoing consumer research that we are undertaking as we prepare to launch the service.
	The FCA standards make certain specific requirements on the guidance content with regard to collecting relevant information. They were consulted on last year and the near-final version of the guidance standards was published in November. The standards include a number of requirements on the content of the session itself, which I hope will allay the noble Baroness’s fears. Perhaps I may set them out. They state that the guidance must request all relevant information from the consumer about their pension entitlement; request relevant information about the consumer’s financial and personal circumstances that would inform the discussion; discuss the relevant options and the key facts and consequences for each option and, based on the information provided by the consumer, set out other issues for the consumer to consider. Ahead of the guidance session, consumers will be encouraged to gather such information as would be useful for the session. The FCA has been clear as to what information it would consider to be relevant under these standards and which it would expect the guidance service to ask for. In terms of financial information, this would include information about pension pots and benefits, or those of their spouse. By any view, that would include any potential state pension that the individual was going to get, although I am willing to go back to the FCA to make it absolutely clear that that is its understanding. I am sure that it is, and it may be that the wording could be tweaked.
	Other things that fall under this heading are current and future sources of income; entitlement to state benefits, current and future; and whether they are a homeowner or renting. This gets to the point that a number of noble Lords have made about the importance of housing wealth, with which the Government obviously completely agree, and whether this statement on whether someone is a homeowner or renting should be expanded to include a reference to housing wealth as opposed to simply referring to housing status. One cannot imagine in the guidance session the discussion going, “Do you own a house or are you renting?” and someone saying, “I own a house”, with the response being, “Well, that’s jolly nice—now, next question”. The purpose of knowing what the housing status is to get some sense of housing wealth, but perhaps we should be more explicit, and I shall take it back. I agree completely with what the noble Lord, Lord Best, and my noble friend Lord
	German said about the relevance of housing wealth, because it overshadows all the other assets that most people have. As the noble Lord, Lord Best, knows, I am very supportive of many of the recommendations in his report on affordable downsizing. Having answered a Question on the subject in your Lordships’ House, I know that this issue raises many and various passions on both sides of the debate.
	I should add that the standards already refer explicitly to debt provision. The noble Baroness said that it was important to take account of debts as well as assets. The standard already has that phrase in it, so I think that it covers the matter. The personal circumstances that would also have to be taken into account get us back to the question of the broader context of the guidance session. Those would include a discussion of dependants, state of health, and potential long-term needs. So I hope that I have been able to reassure the noble Baroness on these points.
	The guidance aims to help people to prepare ahead of their session and identify the relevant information that they will need. The FCA has clarified in its rules for pension providers what information should be provided to consumers approaching retirement, and the Government are working with the FCA, the Pensions Regulator, industry and other stakeholders to consider how individuals can quickly and simply access information on their pension pots in an easily useable format. The guidance will also inform people that they can request a state pension statement from DWP to get an estimate of their state pension position. The FCA standards are designed with the aim of ensuring that the service delivers helpful guidance for consumers in considering their retirement options. Ensuring that consumers consider factors which are pertinent to their retirement decision, as relevant to them, is an important part of what the standards capture.
	I hope that I have been able to reassure the noble Baroness, Lady Hollis, on most of her amendments. We are coming on to the second line of defence before long, so I shall deal with that once rather than twice. On the specific question raised by the noble Baroness about whether the £20,000 pension pot would be taken into account, as I said in response to an earlier amendment, the broad principle is that eligibility for benefits should not be significantly altered by this change. However, I will write to her to clarify that.

Baroness Hollis of Heigham: The point is that housing benefit is the one benefit that continues in its current form both before and after retirement. Nearly all other benefits change at the point of retirement. Therefore, the issue does not arise. For example, there is no assumption that there is a capital cut-off if you are on pension credit, merely an assumed tariff income. What you are doing now is introducing some of the potential privileges associated with protecting pensions to a pre-pension age. If you do that, that is fine, but if you do not, it means that housing benefit will be wiped out for someone who has capital that they can access, even if they choose not to do so. As the current rules stand, they would have to be treated as if they had accessed that capital, and then housing benefit would be wiped out for someone at the age of 55 in the way it would not be wiped out if that person was 65.

Lord Newby: My understanding is that that is not the intention, but I shall write to the noble Baroness to clarify that point.

Baroness Greengross: My Lords, I thank the Minister for his very comprehensive reply. I also thank the noble Lords, Lord Best and Lord German, and the noble Baroness, Lady Hollis, who joined in the discussion.
	I thought that the Minister’s response was very helpful and inclusive of most of the issues I have raised. He took on board the idea of a prompt, or several prompts, and I think that the wider issues of including other sources of wealth and income were taken. There may be other issues that I have forgotten, but there is time to look at those. I thank the Minister very sincerely for trying to meet all the requirements that I mentioned and for clarifying the role of the FCA and the Treasury, talking about a full programme of monitoring, and looking at the relevant issues that need to be considered in more depth and the rules about guidance that are going to go back to the FCA. The Minister has addressed most of the issues that I raised and I will look between now and the next stage to see whether there are any others that he forgot. In the mean time, I beg leave to withdraw the amendment.
	Amendment 34 withdrawn.
	Amendment 35 not moved.
	Amendment 36
	 Moved by Lord Bradley
	36: Schedule 3, page 66, line 10, at end insert—
	“( ) must be sufficient to ensure that the body is capable of carrying out its functions under section 333C(1).”

Lord Bradley: My Lords, I will be brief because we covered a significant amount of the areas to which this amendment relates earlier in our deliberations. I would like to probe the Government just a little further on the arrangements with the citizens advice bureaux. Specifically, I am seeking assurance that the CABs are capable of delivering the guidance, that they have sufficient start-up costs and that they will be properly funded to deliver face-to-face guidance through the proposed levy. I do not make any apology for repeating arguments that we have already made earlier in our deliberations, because, again, all we are trying to do with this amendment is to give a belt-and-braces assurance to the public that the guidance guarantee for face-to-face interviews will be delivered.
	Let me say at the outset that I am not questioning the CABs and the wonderful work that they do, but pensions advice and guidance is not currently one of the services that they routinely provide. CABs work with 2.1 million people a year and they offer advice in England through 338 independent centres. Impressive though that number is, next year we know that around 600,000 additional people will reach retirement age and may seek—and under this Bill be entitled to— guidance. This high number carries on for a number of years because of the post-war baby boom. This is some scaling-up for the CABs and they will need to achieve this in order to deliver the high-quality guidance.
	Relevant to this guidance, CABs offer financial and debt advice; over the past 10 years or so, they have been
	developing interesting financial capability programmes. It is good work and this experience might be particularly relevant to people who are being encouraged to draw down their pension pots at 55—for example, to settle debt. Pension advice to people retiring with pots of £20,000 to £30,000 probably takes the CABs into new areas and a largely new client base. We should remember that the enactment date is less than three months away and we have not had any sight of the regulations, while the FCA is developing a standard framework within which guidance will be offered—some of which we have had further information about today. There is still more information to come: information that, again, the CABs will rely on. Clearly, it is not the intention to set up CABs or any other provider to fail. If CABs are to deliver a service from April 2015, they perhaps should have had their guidance and information framework well in place before now. CABs produce high-quality information that underpins their advice work, and they know how long it takes to develop such information. Although the issue is not caught by my amendment, the Minister could perhaps assure the House that high-quality guidance will be delivered to 300,000 people whom we anticipate will retire and need guidance before September 2015.
	The CABs’ excellent work is a lifeline for some of the poorest people in our society, often the most vulnerable people at vulnerable times in their lives, such as during divorce or separation. This is why—and despite often swingeing cuts—local authorities continue to fund local bureaux, albeit now often at a lower level of service. I am worried that the time of local bureaux will be diverted from their core work, and their service users will have nowhere else to go, particularly—to compound the problem—because legal aid is now hardly available for this group of people. Frankly, local authorities should not, in future, find themselves in a position where they will be picking up the tab for a poorly funded pensions advice service delivered through the citizens advice bureaux. The Minister has given us some assurances on this point, but I seek that further assurance again today. Can we also be assured that the core grant that citizens advice bureaux currently have for their services will not be deflected at all by the money available for this specific service—that there is no overlap between the services in terms of funding streams?
	Finally, we know that CABs will be funded by the Treasury for the first two years, and after that through a levy on the industry. Again, I seek an assurance that, with this levy, it will not be necessary for CABs to move money between their funding streams to support their current wide range of services in order to deliver the essential pensions guidance that is coming forward. We know that these are complex matters for people who will be seeking CABs’ advice. We want to ensure the highest quality of that service, but we also want to make sure that the other range of activities that are essential in local communities are not undermined by the emphasis on the new service. I beg to move.

Lord Newby: My Lords, the noble Lord, Lord Bradley, sought a number of assurances about the funding of the guidance and the knock-on effects that this will have on CABs. The Treasury is committed to the provision
	of high-quality guidance from the start. It has the power in line 12 of page 65, in proposed new Section 333B:
	“The Treasury must take such steps as they consider appropriate to ensure that people have access to pensions guidance”.
	Given that when we say “pensions guidance” we mean high-quality pensions guidance, that means that there is a legal requirement on the Treasury to will the means as well as the ends.
	In terms of the scale of the challenge ahead, we estimate that approximately 300 guidance providers are going to be required, including the CABs, the telephone appointments and the website, and we are actively recruiting them. The funding that the CABs are getting is the subject of continuous discussions between the Treasury and the CABs. I gather that, for the moment at least, the CABs feel that that they are getting the resources they need to do the job that they have been asked to do without any deflection of their core grant and without there being any requirement to fund this from other sources of income that they receive. That is very much the Treasury’s intention behind the whole approach to the scheme.
	There has been start-up funding, which the CABs and the other guidance providers have been receiving. The £20 million development fund was announced in the Budget, of which a £10 million advance was approved by Parliament last July to cover preparatory work, most of which is taking the form of grants to the delivery partners. As I said earlier this afternoon, we estimate that there will be a cost of £35 million in the next financial year, and the Treasury is committed to increasing the amount that is made available if the demand for the service warrants it. I hope that, with those assurances, the noble Lord will feel able to withdraw his amendment.

Lord Bradley: I am grateful to the Minister for his response. I certainly would have liked to be a fly on the wall in the negotiations between the CABs and the Treasury to see where they were both coming from as their starting point, let alone where they ended up. I am grateful for the assurances that the Minister has given regarding other funding streams for the CABs and the funding for this service. Clearly, none of us wants to get into a situation where the CABs have to prop up the service by use of their invaluable volunteers, who do excellent work within citizens advice bureaux but obviously would not have the expertise, knowledge or training to undertake this work. It is therefore crucial that the activities are separated in that way. However, with those assurances from the Minister, I beg leave to withdraw the amendment.
	Amendment 36 withdrawn.
	Amendment 37 not moved.
	Amendment 38 had been withdrawn from the Marshalled List.
	Amendments 39 and 40 not moved.
	Amendment 40A
	 Moved by Lord Bradley
	40A: Schedule 3, page 71, line 40, at end insert—
	“( ) The FCA must secure an appropriate degree of protection for consumers whether they have used pensions guidance or
	otherwise throughout the decision-making and purchasing process, including safeguards to actively inform consumers of key risks and benefits.”

Lord Bradley: My Lords, this amendment is on the specific issue of second line of defence. We have had some debate on this matter, including the excellent contribution from the noble Baroness, Lady Greengross, on her amendments. However, this amendment places a specific requirement on pension providers to make an active intervention to ensure that they help savers when accessing their DC pension pots to ensure that they get the advice or guidance they need, check that the products are appropriate for them, and have taken into account the tax implications, their partners, lifespan and other matters relevant to planning for their retirement. As we have heard, this has been called the second line of defence.
	The need for it has been identified by the Financial Conduct Authority, which released two long-awaited reports—its thematic review of annuity sales practices and Retirement Income Market Study: Interim Report. The reports show continued failure in defined contribution pension providers’ treatment of existing customers, even after three separate investigations between 2006 and 2014. It is time for the FCA to take action before the “freedom and choice” reforms go live in April this year. The findings of the reports make unhappy reading. Perhaps my noble friends will not be surprised by this because we have been there before. It is worth summarising the key findings, which make the case for our amendment.
	The thematic review updates the analysis in the FCA’s February 2014 report. Its key findings are, first, that, 60% of retirees,
	“were not switching providers when they bought an annuity, despite the fact that around 80% of these consumers could get a higher income on the open market”.
	Secondly, an estimated 91% of people with medical conditions could get a higher income on the open market through an enhanced annuity. Thirdly,
	“firms’ sales practices are contributing to consumers not shopping around and switching … and missing out on a potentially higher income in retirement as a result”.
	Lastly, the study found non-adherence by pension providers to the ABI code of practice. The FCA concludes that its findings clearly highlight that firms need to make improvements in relation to how consumers are informed about shopping around for enhanced annuities.
	The key findings of the interim Retirement Income Market Study are that,
	“competition in the retirement income market is not working well for consumers … many consumers are missing out on a higher income by not shopping around for an annuity, and some do not purchase the best annuity for their circumstances”.
	The FCA economic analysis shows that,
	“for people with average-sized pension pots, the right annuity purchased on the open market offers good value for money relative to alternative drawdown strategies”.
	It also found that:
	“Consumers’ tendency to buy from their existing pension provider weakens”,
	competition. The FCA’s consumer research confirms that,
	“pension savers display well-known biases, such as a tendency to under-estimate longevity, inflation and investment risk”,
	which make them vulnerable to being sold products that do not best meet their best interests. This research also finds that the choices that savers make are highly sensitive to “framing”, and how options are presented will affect decisions they make. The introduction of greater choice and potentially more complex products will,
	“reduce consumers’ confidence and appetite to shop around”,
	and thus weaken the competitive pressure on providers to offer good value in this market.
	What should be the remedies and next steps? The FCA is continuing to monitor the market and is expected to publish a final market study report in the first quarter of this year. It is also seeking views on five proposals it hopes to take forward in 2015. These are to: first, require providers to show how their quotes compare relative to other providers on the open market, including quote comparison; secondly, develop plain-English pensions guidance services and tools to support consumers’ decision-making; and thirdly, develop an alternative to the current pre-retirement “wake-up” packs sent by pension providers to their customers in the run-up to their stated retirement date. They are,
	“too long, difficult to navigate and full of jargon”.
	Next, the FCA proposes in the longer term, to develop a “Pensions Dashboard” to,
	“enable consumers to view all of their lifetime … savings … (including the state pension entitlement) in one place”.
	Finally, the FCA proposes to,
	“continue to monitor the market as it evolves using a combination of consumer research, market data and”,
	ongoing regulatory supervision. This will need to monitor for the likelihood of “pensions liberation” and other scams targeting consumers at retirement.
	We have in this Chamber on too many occasions examined how the FCA and other bodies are attempting to drag this financial sector kicking and screaming to act in the best interests of its savers rather than those of their shareholders. The two FCA reports are a further damning indictment of the industry. The FCA proposals, in my view and that of my noble friend Lord McAvoy, help to support the amendment but in themselves are not enough.
	In Committee in the Commons, expert witnesses including Dr Ros Altmann, consumer advocates from Age UK and the Financial Services Consumer Panel, and ABI representatives all called for the FCA to introduce a second line of defence, as did other reputable bodies such as Just Retirement. We are persuaded that this is the right course of action. Our amendment will require pension providers to actively ask savers seeking to access their pension savings whether they have considered the most important risks. This could typically include whether their decisions will mean they increase their income tax, outlive assets or run out of money, miss out on guaranteed annuity rates from the existing company, provide benefits for a spouse or other persons on death, miss out on additional income resulting from medical conditions or lifestyle factors, protect savings and income from inflation, purchase an uncompetitive product, or pay an exit charge that could be avoided. All these are crucial matters that need to be properly
	regulated, and they are part of the amendment for our second line of defence. The FCA could incorporate this through the introduction of a conduct regulation or by issuing FCA conduct guidance for providers to specify their responsibility for actively raising the risks that I have just outlined.
	If we do not take this opportunity to act on the evidence contained in these two FCA reports and require changes to be made, we will further undermine consumer confidence in the pensions financial sector and the principles upon which this series of pension reforms are based will be undermined. We will not encourage people to save for their old age; we will not achieve fairness across generations; and it will lead to increased cost to the taxpayer. For all these reasons I commend this amendment to the House.

Baroness Drake: My Lords, this amendment sets out a duty on the Financial Conduct Authority to protect savers accessing their pension savings during the actual decision-making and purchasing process, as distinct from a duty to protect savers receiving guidance from designated guidance providers. In particular, the amendment sets out that the FCA should require pension providers to take active, not just passive, steps to check that people are made aware of the factors that will impact their decision.
	I will begin by highlighting the problem that drives this amendment. Steve Webb, the Pensions Minister, commented at the end of the Public Bill Committee sessions:
	“To be clear, if we thought everything was fine in the world of retirement income choices the FCA would not be doing a thematic review of annuity sales practices or a retirement income market study … those studies are being undertaken because we are aware that there have been problems in this market. We are prepared to introduce further measures, if that is what the studies suggest”.—[Official Report, Commons, Pensions Schemes Bill Committee, 4/11/14; col. 309.]
	I believe that that is exactly what those two studies suggest. Since the Bill arrived in this House the FCA has in fact delivered its two reports: the thematic review of annuity sales practices and the interim report on the retirement income market study. Perhaps I may capture the essence of what it reported.
	The review found that annuity sales practices were contributing to consumers not shopping around, buying the wrong type of annuity or missing out on a potentially higher income. The consumers’ tendency to buy from their existing pension provider weakens competition. The FCA identified the non-adherence by providers to the ABI’s own retirement choices code. In fact, the ABI urged the FCA to replace its code with regulation because it recognises that with the new freedoms more needs to be done.
	As to the FCA retirement income market study, that was initially focused on how to get competition working more effectively for consumers; but following the Budget the emphasis was shifted towards looking at how market conditions might evolve from the advent of the reforms in April 2015. Its interim report suggests that consumers will be poorly placed to drive effective competition; that the retirement income market is not working well; and that the introduction of greater choice
	and potentially more complex products will reduce consumer confidence and weaken the competitive pressures on providers to offer good value.
	Even after repeated analysis of these issues by the Treasury, the FSA, the FCA and others over a period of six years, and just three months away from the introduction of major reforms to the UK pensions framework in April 2015, too many consumers are still being failed by their providers. As my noble friend commented, the FCA research confirmed the well known biases that savers reveal that make them so vulnerable to being sold products that do not best meet their needs, and that the choices consumers make are strongly influenced by how options are presented to them. Martin Wheatley, the FCA CEO, said in a recent interview—published just this weekend—that the timescale to deliver the new freedoms and design suitable products was challenging; providers have been struggling to complete proper due diligence testing on their products.
	Turning to the savers, the new freedoms bring with them an even greater onus on individuals to make an active decision about what to do with their pension pot. It is very important, therefore, that consumers are well placed to make decisions that are in their interests. We know the challenges to achieving this: provider behaviour; product design and complexity; savers’ behavioural biases; and financial capability. The noble Baroness, Lady Greengross, is president of the International Longevity Centre, whose new report on making the system fit for purpose reveals the extent of the limited knowledge of savers about relevant products and services, despite the new freedoms being just three months away.
	The guidance guarantee is a key policy measure for helping people to navigate the complex retirement options arena from April 2015. I know that there are people working very hard to make its delivery a success. I certainly want it to be successful, as it will provide a very important service to savers. In support of that guaranteed guidance the FCA has confirmed that it will expect providers to check whether a customer has used the guidance service and encourage them to do so if not. It has also recommended that the pensions guidance service incorporates tools to support consumer decision-making. This provides a first line of defence against consumer detriment. The provision of guidance is extremely important, but what the customer does with the guidance also matters. The success of guidance can be achieved only by the whole industry working together. Some people will choose not to take the guidance even if encouraged by their provider.
	The Government are very dependent on market behaviour to ensure the success of the new freedoms. Beyond guidance, the saver has to move into the process of making a decision and selecting or purchasing a retirement income route. It is what happens at that stage—the exchange between the consumer and the provider—that is causing so much anxiety.
	This amendment is directed at that exchange between the provider and the consumer and puts a duty on the FCA to secure an appropriate degree of protection for the consumer at that stage. That is what is popularly referred to as the second line of defence, to mitigate the risk that savers make detrimental and irreversible choices. After the pension provider has asked the
	customer whether they have accessed guidance, it should be required to make active interventions, not just the current passive and paper-based disclosures. The FCA reports show that these are clearly failing savers, particularly where they buy a product from their existing provider through inertia, rather than making an active choice. The FCA should require pension providers to take active steps to make people aware of factors passively referred to in the literature and key facts documentation, by asking key questions of the consumer to highlight such matters as the potential impact of health, income tax, dependants, longevity, investment risk and income needs though retirement. That will highlight factors whose impact can lead to poor choices if overlooked.
	The FCA analysis, as my noble friend said, revealed that the take-up of enhanced annuities because of health factors by those who remained with their existing pension provider was just 5%, while for those who shopped around the take-up was 50%. That is strong evidence that consumers need an active prompt to consider factors that have a bearing on their incomes in retirement. It is all the more important because decisions on pension savings can be irreversible. This Bill and the Taxation of Pensions Act create unprecedented options for retirees, so the passive approach is no longer sufficient.
	The FCA is expected to publish its final market study report in early 2015. It is consulting on certain proposals, as my noble friend detailed, and it will continue to monitor the market. However, this is a reactive approach, waiting to see what problems emerge, and the amendment is underpinned by the belief that prevention is preferable to later cure. With around 400,000 consumers expected to access the new pension freedoms in 2015, yet another review may be required without the additional protections proposed in the amendment, to discover why thousands of pension savers did not make good decisions or get good value for money.
	The amendment would introduce a general duty on the FCA and allow protections in time for April 2015, but it would not prevent the Government setting such other further requirements as they considered appropriate in the light of how the retirement market evolved. As the noble Baroness, Lady Greengross, stated when moving her amendment, consumer advocates, industry groups, providers and members of the Work and Pensions Committee have all expressed concerns that, without a second line of defence, mis-selling and poor decisions remain a key risk.

Lord McKenzie of Luton: My Lords, I support the amendment and have added my name to it. As we have heard, it is about placing a duty on the FCA to set regulations for pension providers to deliver adequate protection for consumers—the second line of defence. However, having heard the contributions of my noble friends Lord Bradley and Lady Drake, I find myself with nothing further to say. I could go through some partial repetition but I think that, in the circumstances, I will desist.

Lord Newby: My Lords, I thank all noble Lords who have spoken on this amendment, and perhaps particularly the noble Lord, Lord McKenzie of Luton.
	The amendment relates to the FCA’s duty to secure an appropriate degree of protection for consumers making a decision about their retirement income, with or without guidance. It is important to recognise that, as noble Lords have said and as was mentioned in a previous debate today, not all individuals will seek to take up the guidance offer, and that is their choice. I agree with noble Lords that, whether a consumer has taken guidance or not, they should be assured of their protection in the financial services market and be furnished with the right information to make an informed choice. I completely accept the point made by noble Lords —and as demonstrated in the FCA’s market studies—that in the past this has often not been the case.
	First, the FCA is a relatively new body with new powers. I assure noble Lords that it has a duty to ensure that the retirement income market is working for consumers. That is captured under its statutory objectives, including its objective to secure an appropriate degree of protection for consumers in this market, which already extends across retail financial services markets. The FCA has specifically committed to closely monitor how the retirement income market develops and to take action where appropriate. It has broad powers to take action if there is evidence of mis-selling of products that are clearly inappropriate for consumers. It also has product intervention powers, which allow it to ban features of products or require products to be sold with certain protections or restrictions in place.
	It is also important that consumers have the right fundamental information that they need to inform their choices, whether they take guidance or not. For those who choose not to take up the offer of guidance—the amendment is about people who choose not to take up the guidance; the issues raised here will be covered in the guidance sessions—the FCA’s rules, which it recently consulted on, in respect of these pension changes will require firms to provide a description of the possible tax implications when people apply to access their pension fund. The FCA has also made it clear that firms can question a customer’s decision where they feel it is inconsistent with their circumstances without fear of overstepping the boundary into regulated advice.
	As noble Lords have pointed out, the FCA has committed to reviewing all its rules in the first half of this year. I assure noble Lords that it is considering what additional consumer protections should be put in place to support people making choices about their pension savings and the implications of those different choices. This is not simply a reactive approach; the FCA is doing this in the light of the work that it has already done and in the light of its extensive understanding of the market.
	This debate highlighted an important issue of FCA protection. I hope that I have been able to assure noble Lords that not only does the FCA already have a duty to secure an appropriate degree of protection for consumers, regardless of whether they have used the Pension Wise service, but it has the appropriate powers to fulfil this duty without this amendment. Its attention is suitably focused on the development and treatment of consumers in the retirement income market. I hope that the noble Lord will therefore see fit to withdraw his amendment.

Lord Bradley: First, I thank my noble friends Lady Drake and Lord McKenzie for their excellent contributions, which are welcomed on both sides of the Committee. There is a strong feeling that it is very important that the second line of defence, as put forward in our amendment, is part of the Bill.
	While I am grateful to the Minister for his comments, I feel that there is a degree of complacency in his response. We obviously recognise that the FCA is a new body and that its work is unfolding. However, there is a rather greater degree of urgency about the matters that we have placed before the Committee in the light of the fact that these new provisions for freedom and flexibility come into force in just a few weeks’ time. We do not want to be in the position where there is not complete confidence in the market and where all the relevant matters have not been taken into account with guidance and, through our amendment, a second line of defence to give absolute certainty to the public that the market which they will be moving into is operating in their best interests.
	We need to reflect very carefully on what the Minister has said and on the fact that the public seek those assurances and want that second line of defence in legislation to underpin that confidence. For now, I beg leave to withdraw the amendment, although we may well return to this matter at a later stage.
	Amendment 40A withdrawn.
	Amendments 41 to 44
	 Moved by Lord Bourne of Aberystwyth
	41: Schedule 3, page 74, leave out line 35 and insert “, and survivors of members of the scheme, with subsisting rights in respect of any flexible benefits.”
	42: Schedule 3, page 74, line 44, leave out “with a right or entitlement to flexible benefits” and insert “, and survivors of members of pension schemes, with subsisting rights in respect of any flexible benefits.”
	43: Schedule 3, page 75, line 10, at end insert—
	““subsisting rights” has the meaning given by section 74 of the Pension Schemes Act 2014;
	“survivor” has the meaning given by section 74 of the Pension Schemes Act 2014.”
	44: Schedule 3, page 78, line 1, leave out “with a right or entitlement to flexible benefits” and insert “, and survivors of members of the scheme, with subsisting rights in respect of any flexible benefits”
	Amendments 41 to 44 agreed.
	Schedule 3, as amended, agreed.
	Clause 48: Independent advice in respect of conversions and transfers: Great Britain
	Amendment 44A
	 Moved by Lord Bradley
	44A: Clause 48, page 20, line 16, leave out “appropriate independent advice” and insert “independent advice from an appropriate person”.

Lord Bradley: In moving this amendment to Clause 48, I will soon be moving back to government Amendments 45 and—

Baroness Fookes: Perhaps I may interpolate. The groupings list is slightly in the wrong order. I have been following the correct order as it appears in the Marshalled List.

Lord Bradley: I am grateful for that clarification as, I am sure, is the whole Committee. In moving Amendment 44A I shall speak also to Amendments 47 and 48.
	At this Committee stage, we have tabled amendments on all the recommendations of the Delegated Powers Committee. The Government will either accept the recommendations of that committee or put on record why they do not believe that the delegated power in question requires the affirmative procedure. That is what our amendments in this group do. The Delegated Powers Committee recommended that the power in Clause 48(3) be subject to the affirmative procedure as the power contained in it is, to quote from the report, “very significant”, not only in the context of Clause 48 but for the purpose of Chapter 2 of Part 4 as a whole. That is a very fair summary. The power enables the Secretary of State to provide for exceptions from the need to seek independent advice, which is central to ensuring that someone in a defined benefits scheme, for instance, is adequately informed of the risks and rewards of transferring out in order to access their pensions.
	The power in Clause 48(7) is equally fundamental, giving as it does the Secretary of State the power to define what counts as “appropriate independent advice”. Our amendment is designed to probe exactly what would be meant by “appropriate independent advice”. Will the scheme trustees or managers be required to assess the appropriateness of the advice received—that in the circumstances of the particular scheme member the recommendation is the right one and transferring out will not harm their chances of having a good requirement income? The alternative is that the scheme trustees or managers will have to check that the advice received by the scheme member comes from someone appropriate who is regulated by the FCA. Our amendment gives the Government the chance to clarify that point. The difference in responsibility and cost is obviously significant.
	I acknowledge that the Minister has already been kind enough to write to me, for which I am grateful, and the Government’s response to the Delegated Powers Committee has made it clear that the definition of “appropriate independent advice” will be through a regulation that is subject to the affirmative procedure, although as a consequence not directly part of the primary legislation in this Bill. None the less, it would be very helpful if the Minister could put on record the likely content of the regulation and give as many details as he is able to about it so that it addresses the issues I have raised in the amendments.
	Can the Minister also give the Committee an update on the likely timing of that regulation? The response to the Delegated Powers Committee on 6 January says that it is likely to be “in the new year”. Given that it
	also says that it has to be in place by April, we are safe to assume that the new year does not mean January 2016. However, it would be helpful if the Minister could say when that regulation is likely to be laid so that there can be proper scrutiny of it. I beg to move.

Baroness Drake: My Lords, I had not intended to speak on this amendment but I should like to support my noble friend in his probing. As a pension trustee, I deal with these requests for transfers for a cash equivalent value from DB to DC schemes. I think I dealt with two this morning. As someone with a fiduciary duty—when I see the scale of what can be transferred—they keep me awake at night. What I had to sign off this morning made me think that I should take the opportunity to reinforce my noble friend’s concern.
	I am sure that demand for these transfers is already rising in anticipation of the new freedoms that will flow from April 2015. I am concerned. We have already seen problems such as pensions liberation. We can talk about the FCA and the regulated industry, but what unregulated charlatans and scoundrels are waiting in the wings to encourage people to transfer their funds and access their freedoms? As someone who has been a trustee for about 27 years—dreadful I know—I have seen the personal pensions problem, the cash accounts transfer values and the pension liberation scams. I have watched these things from the perspective of a trustee. I have a real fear that this is a car crash waiting to happen unless it is properly regulated.
	Two adjectives go with advice: “independent” and “appropriate”. Independence is easy to define, in a way, because it has a regulatory definition. What is really important is what is appropriate. As a trustee I would want to know what the Government think is the appropriateness of the advice people have received when they make applications to the schemes of which I am a trustee for such a transfer.
	I read the response to my noble friend Lord Bradley on the Delegated Powers and Regulatory Reform Committee’s report and my reading of that letter is that the Government are on the case. That would be great, and if they are I want to say positive things and encourage the Minister to deal with this robustly, because it is a car crash waiting to happen. It is not just a matter of the big defined benefit pots. If you are on quite a modest income and are lucky enough to have a DB scheme, then even if your pension is going to be about £4,000 a year that will translate into a really big pot of cash—a pot of cash such as you may not have seen before—leaving you quite vulnerable. I can see from the letter to my noble friend Lord Bradley that the Government are on the case. I urge them to stay on the case.

Lord Newby: My Lords, these amendments give expression to the recommendations of the Delegated Powers and Regulatory Reform Committee concerning Clause 48. Amendments 47 and 48 make the regulations under subsections (3) and (7) subject to the affirmative procedure. Amendment 44A narrows the power taken in Clause 48(7) in such a way that regulations could not be made setting out the nature of appropriate advice but would instead focus on the characteristics of an appropriate person. As the noble Baroness has
	just pointed out, my colleague Steve Webb, the Minister for Pensions, wrote to the noble Baroness, Lady Thomas, chair of the Delegated Powers and Regulatory Reform Committee, acknowledging the committee’s concerns, providing a commitment to address them as far as we can and explaining why we were unable to accept the committee’s exact recommendations. The letter details alternative ways in which we will be able to address the concerns of the committee and the House. As Amendments 47 and 48 implement the committee’s recommendations, the government response is along similar lines to the letter, which can be found in the Library.
	Regulations under subsection (7) of Clause 48 of the Pension Schemes Bill will set out the definition of “appropriate independent advice” that underpins the advice safeguard. We recognise the concerns about the lack of the definition of appropriate independent advice in the Bill. In the response document to the consultation on freedom and choice in pensions, we set out that appropriate independent advice would be delivered by an adviser who is authorised by the FCA. In response to the concerns expressed by the Delegated Powers and Regulatory Reform Committee and in Amendment 48, we are now looking into bringing forward an amendment to Clause 48 on Report to provide more detail about the meaning of appropriate independent advice in the Bill.
	Our intention is to define appropriate independent advice in regulations by reference to activity regulated by the Financial Conduct Authority. To facilitate this, the Treasury intends to legislate to add a new activity to the FCA’s regulated activity order. This will be done by means of a statutory instrument amending the Financial Services and Markets Act (Regulated Activities) Order 2000. We do not think it is appropriate to refer to subordinate legislation which has yet to be made in the Pension Schemes Bill but this statutory instrument, which we intend to lay later this month, will be subject to the affirmative procedure.
	In order to ensure that the definition in the Bill fits with any definition in the regulated activity order, we will still need to leave at least some of the detail of the definition in Clause 48 to regulations. We think it is appropriate that such regulations be subject to negative procedure, especially if the parameters of the definition can be expanded upon in the Bill. We do not think, however, that it would be appropriate for these amendments to require the regulations to become subject to the affirmative procedure as this would mean they would not be in place by April this year, when the flexibilities come into force. Schemes would then find themselves subject to a requirement that was legally uncertain and there would be no effective advice safeguard in place to protect members or survivors.
	Subsection (3) of Clause 48 provides for regulations to be made which set out exceptions to the appropriate independent advice safeguard. We set out in the consultation response document on freedom and choice in pensions, published in July last year, that we intended to exempt those with pensions wealth below £30,000 from having to obtain advice if they wished to transfer
	safeguarded benefits. This remains our only intended use of the exemption. However, once the new flexibilities come into force, it may prove necessary to create an exemption for other special circumstances.
	The exemption threshold of £30,000 and below will need to be adjusted and up-rated over time and therefore we feel the affirmative procedure would not be suitable. However, in response to the concerns raised by the Delegated Powers and Regulatory Reform Committee report, we are looking into bringing forward an amendment on Report to subsection (3) to ensure that exemptions to the advice safeguard, other than for members with small amounts of safeguarded benefits, would be subject to the affirmative procedure. This would ensure that the House had the opportunity to scrutinise any other exemptions that are required to the appropriate advice safeguard.
	We understand that Amendment 44A proceeds from nervousness in the industry that under this new safeguard trustees or managers might have to examine the advice that has been provided to their members, as opposed to simply checking that the advice has been received. I can assure the House that it is not our intention that trustees or managers should have to evaluate the content of the advice or check its quality.
	We recognise the concerns about the lack of detail in the Bill with regard to the definition of appropriate independent advice. I have already mentioned that we are now looking into bringing forward an amendment to Clause 48 on Report to provide more detail about the meaning of appropriate independent advice in the Bill. The approach suggested in Amendment 44A is useful to us in our considerations about the amendments we are considering to clarify the nature of the advice. We will therefore consider Amendment 44A but regret that we are not in a position to accept it at this stage of the Bill in its current form.
	The concerns expressed by Amendments 44A, 47 and 48 and by the Delegated Powers and Regulatory Reform Committee are understandable. However, I hope noble Lords are reassured that I have been able to offer enough to address them and that Members appreciate that it is not in the interests of the consumer or the industry for the tax flexibilities to come into force without a meaningful, clear and effective advice safeguard coming into force alongside them. We will therefore be considering this further and, as such, I ask the noble Lord not to press the amendments given the planned forthcoming government amendments.

Lord Bradley: I am grateful to the Minister for that detailed and rapid response to the amendments. It will require careful reading to ensure that we fully appreciate all the issues that he has laid out to the Committee. The key element I should be pleased about is that Amendment 44A will be reflected upon by the Government as they devise their own amendments to be brought back on Report, which I understand is currently scheduled to be within a couple of weeks or so. There is some urgency that there is that clarification. However, with that assurance and in the light of being able to look at that within the context of the other matters raised in the amendments, I beg leave to withdraw the amendment.
	Amendment 44A withdrawn.
	Amendment 45
	 Moved by Lord Newby
	45: Clause 48, page 20, line 20, after “acquiring” insert “a right or entitlement to”

Lord Newby: My Lords, at Second Reading my noble friend Lord Bourne explained that there was a need to define flexible benefits due to differences between pensions and tax legislation regarding money purchase benefits. The definition of flexible benefits contains three elements. These are: money purchase benefits; cash balance benefits; and a third category of benefit which is not money purchase or cash balance but is calculated by reference to an amount available for the provision of benefits. The most common form of benefit offered in this category relates to a pension with the option of a guaranteed annuity rate. It is to this third category that the amendments are primarily aimed.
	Amendments 46 and 50 ensure that a scheme must check that a member has received appropriate independent advice before paying an uncrystallised funds pension lump sum from arrangements in the third category of flexible benefit, which includes guaranteed annuity rate pensions. Benefits within this third category offer a level of security of income akin to defined benefit arrangements. Guaranteed annuity rates were typically issued in the late 1980s and 1990s, their distinguishing feature being an enticement to customers promising that when they came to take these pensions, if they bought their annuity with the provider with which they had accumulated the pension, they would get an annuity rate specified at the point of purchase.
	Due to the decline in annuity rates, the pensions these guaranteed annuity rate arrangements provide by means of annuities are especially generous. Therefore in the Bill they are given the same safeguarded treatment as a defined benefit pension. An individual should, in each case, understand what it is they are giving up before taking advantage of the new flexibilities. The Bill already requires a scheme to check that advice has been received before an individual transfers their rights from such an arrangement, or where a member converts their benefit into a draw-down arrangement.
	Amendment 46 extends this protection to the circumstance where a member or survivor takes an uncrystallised funds pension lump sum. Clause 48 does not currently require this because taking such a lump sum does not constitute a transfer or a conversion. I must emphasise that these amendments only require that advice be taken before taking an uncrystallised lump sum in return for safeguarded benefits. It does not require that advice be taken on uncrystallised lump sums in any other circumstances.
	Amendment 46 amends Clause 48, providing that this has effect for Great Britain. Amendment 50 amends Clause 51, making parallel provision for Northern Ireland. Amendment 103 defines uncrystallised funds pension lump sum by reference to the Finance Act 2004.
	I recognise that these amendments are challenging to explain and understand but the effect is to make a small change that ensures that those with valuable benefits such as guaranteed annuity rates will be properly informed before deciding to give up those benefits. I therefore beg to move.

Lord McAvoy: My Lords, I thank the Minister for his explanation of the amendments. “Challenging”is is one of the words that he used. I would like to challenge the thrust of what the Government are saying about these amendments. Although, strictly speaking, he has not used the words “technical amendments”, nevertheless they are in that category. I would like to probe a wee bit further and ask how the amendments came about. What advice was taken, what discussions took place and what organisations were in touch with Ministers to press this change? It could be argued—slightly tendentiously, but it could be argued—that this changes the Bill quite a bit. When did the Government decide to bring out this amendment whereby people with a guaranteed annuity rate pension would have to take advice? It has been a constant theme—not only previously but today in particular—that a number of amendments seem to be afterthoughts or a result of lobbying. It is a good thing in that these are very important issues and people are entitled to try to influence government. However, I would like to probe a wee bit further and ask what process was entered into that ended up with this amendment.

Lord Newby: My Lords, I agree with the noble Lord that the amendments are very technical at one level. However, they are not technical amendments; they are proper substantive amendments. They broaden the scope of the type of pension where people will be required to take advice. I will happily write to him if I can provide him with more details. I think that it simply became apparent to officials during the Bill’s passage that this was a potential—relatively small—market involving a type of pension lump sum that had not been covered in the way that had always been intended for this sort of thing. As we find with most Bills as they go through the House, the Government introduce amendments because they become apparent to officials as they do more work and to parliamentary counsel as it does more work. If there was anything more specific that led to these amendments, I will definitely write to him.
	Amendment 45 agreed.
	Amendment 46
	 Moved by Lord Bourne of Aberystwyth
	46: Clause 48, page 20, line 21, at end insert—
	“( ) paying a lump sum that would be an uncrystallised funds pension lump sum in respect of any of the benefits.”
	Amendment 46 agreed.
	Amendments 47 and 48 not moved.
	Clause 48, as amended, agreed.
	Clauses 49 and 50 agreed.
	Clause 51: Independent advice in respect of conversions and transfers: Northern Ireland
	Amendments 49 and 50
	 Moved by Lord Bourne of Aberystwyth
	49: Clause 51, page 22, line 10, after “acquiring” insert “a right or entitlement to”
	50: Clause 51, page 22, line 11, at end insert—
	“( ) paying a lump sum that would be an uncrystallised funds pension lump sum in respect of any of the benefits.”
	Amendments 49 and 50 agreed.
	Clause 51, as amended, agreed.
	Clauses 52 to 54 agreed.
	Clause 55: Sums or assets that may be designated as available for drawdown: Great Britain
	Amendment 51
	 Moved by Lord Bourne of Aberystwyth
	51: Clause 55, page 25, line 1, after “pension” insert “, nominees’ drawdown pension or successors’ drawdown pension”

Lord Bourne of Aberystwyth: My Lords, I now turn to a further group of amendments which make minor changes to the clauses dealing with draw-down of pension benefits.
	The first set of amendments follows amendments made in Committee in the other place to what is now the Taxation of Pensions Act. The Taxation of Pensions Act will allow for payment of death benefits to nominees and successors of members in relation to money purchase arrangements. The Act makes provision for a nominees’ draw-down pension and a successors’ draw-down pension. These amendments make the changes to this Bill to reflect the introduction of these new types of draw-down pension. They amend Clauses 55 and 56 so that these types of pension are treated in the same way as a dependants’ draw-down pension. They also insert definitions of a nominees’ draw-down pension and a successors’ draw-down pension into Clause 74. Amendments to Clauses 60 and 61 do the same for Northern Ireland. The second set of amendments makes small changes to Clauses 72 to 74, which deal with the definition of terms used in Part 4 of the Bill. As I said, these amendments make minor changes. I hope that noble Lords will agree, and I commend these amendments to the House. I beg to move.

Lord McAvoy: My Lords, I thank the noble Lord for his succinct exposition of the amendments. These are more in line with the phrase “minor and technical”. Nevertheless, I still make the point that there has been a barrage of amendments. We will study these carefully and, if necessary, do something on Report. I just make the point that we will be scrutinising them carefully.
	Amendment 51 agreed.
	Clause 55, as amended, agreed.
	Clause 56: Provision about conversion of certain benefits for drawdown: Great Britain
	Amendments 52 and 53
	 Moved by Lord Bourne of Aberystwyth
	52: Clause 56, page 25, line 17, leave out “or”
	53: Clause 56, page 25, line 17, at end insert “, nominees’ drawdown pension or successors’ drawdown pension”
	Amendments 52 and 53 agreed.
	Clause 56, as amended, agreed.
	Clauses 57 to 59 agreed.
	Amendment 54
	 Moved by Lord Bourne of Aberystwyth
	54: After Clause 59, insert the following new Clause—
	“Sections 55 to 57: consequential amendments
	“(1) In section 101AI of the Pension Schemes Act 1993 (early leavers: cash transfer sums and contribution refunds - further provisions), in subsection(8)—
	(a) in paragraph (a), after sub-paragraph (ix) insert—
	“(x) section 55 of the Pension Schemes Act 2014;
	“(xi) regulations made under section 56 or 57 of the Pension Schemes Act 2014;”;
	(b) in paragraph (b), after sub-paragraph (vii) insert—
	“(viii) section 55(3) of the Pension Schemes Act 2014;
	“(ix) regulations made under section 56(4) or 57(4) of the Pension Schemes Act 2014.”
	(2) In section 67A of the Pensions Act 1995 (the subsisting rights provisions: interpretation), in subsection (9)—
	(a) in paragraph (a), after sub-paragraph (viii) (inserted by section 45of this Act) insert—
	“(ix) section 55 of the Pension Schemes Act 2014;
	(x) regulations made under section 56 or 57 of the Pension Schemes Act 2014;”;
	(b) in paragraph (b), after sub-paragraph (vi) (inserted by section 45 of this Act) insert—
	“(vii) section 55(3) of the Pension Schemes Act 2014;
	(viii) regulations made under section 56(4) or 57(4) of the Pension Schemes Act 2014.”
	(3) In section 318 of the Pensions Act 2004 (interpretation), in subsection (3)—
	(a) in paragraph (a), after sub-paragraph (viii) (inserted by Schedule 2to this Act) insert—
	“(ix) section 55 of the Pension Schemes Act 2014;
	(x) regulations made under section 56 or 57 of the Pension Schemes Act 2014;”;
	(b) in paragraph (b), after sub-paragraph (vi) (inserted by Schedule 2 to this Act) insert—
	“(vii) section 55(3) of the Pension Schemes Act 2014;
	(viii) regulations made under section 56(4) or 57(4) of the Pension Schemes Act 2014.””

Lord Bourne of Aberystwyth: My Lords, this group of amendments makes a number of small consequential amendments, all designed to ensure that the transfer provisions work as intended. The amendments are somewhat technical and I hope your Lordships will bear with me while I set out in a little more detail what they do.
	Amendments 54, 63 and 64 are consequential on Clauses 55 to 57, which make provision in relation to drawdown. Clause 55 contains a provision that overrides scheme rules to the extent that there is any conflict. Clauses 56 and 57 also contain provisions allowing regulations made under them to override scheme rules to the extent that there is a conflict. The amendments make provision to insert a reference to Clauses 55 to 57 into the list of relevant legislative provisions for the purposes of the scheme rules definition in Sections 100B and 101AI of the Pension Schemes Act 1993—in relation to transfer—Section 67A of the Pensions Act 1995—in relation to members’ subsisting rights—and for the purposes of the Pensions Act 2004. Amendments 62, 67, 71 and 73 further ensure that the
	definitions of scheme rules in the 1993 and 2004 Acts also apply for personal pension schemes, taking account of any provisions that override these rules. These provisions are needed to ensure that the new overrides are taken into account in the existing legislation and so that it is clear what is meant by scheme rules where a provision has been overridden. Amendments 58, 63, 64, 77, 82 and 86 make provision for corresponding changes to Northern Ireland legislation.
	I now turn to Amendments 59, 70 and 72. These make amendments to Schedule 4 to update existing cross-references to the transfer rights contained in the Judicial Pensions Act 1981, the Judicial Pensions and Retirement Act 1993, the Pensions Act 1995 and the Scottish Parliamentary Pensions Act 2009, so that they point to Chapters 1 and 2 of new Part 4ZA of the Pensions Schemes Act 1993. This will ensure that transfer provisions continue to operate as intended in conjunction with this Bill in relation to these pension schemes. This schedule also introduces identical provisions for Northern Ireland legislation in Amendments 76 and 87.
	Amendments 60, 61, 68, 69, 75, 76, 78, 79, 83 and 84 amend Schedule 4 to make a number of minor and consequential changes to various sections of the Pensions Schemes Act 1993 and its Northern Ireland equivalent to ensure that the precise wording of the these sections operates as intended, now that a member’s statutory right to transfer will apply at benefit category level.
	Finally in this group, Amendments 65 and 66 make small drafting amendments to new Section 100C of the Pension Schemes Act 1993 to put the meaning of “normal pension age” beyond doubt, with corresponding amendments for the Northern Ireland equivalent through Amendments 80 and 81. The amendments make minor and technical changes to the Bill which are important to ensuring that the legislation operates correctly. I beg to move.

Lord McAvoy: My Lords, I make the point about minor and technical amendments again. We will study them carefully, although with less suspicion than those in other categories. However, I will just say that Amendment 54 takes up a full page on the Marshalled List of amendments. Again, it reinforces the image of things being hurried or missed out when an amendment of that length has to be moved. Having said that, we accept it as a minor and technical amendment.
	Amendment 54 agreed.
	Amendment 54A
	 Moved by Lord Bradley
	54A: After Clause 59, insert the following new Clause—
	“Drawdown funds: cap on charges
	The Secretary of State may make regulations imposing a cap on the charges that may be imposed on members of flexi-access drawdown funds.”

Lord Bradley: My Lords, having listened to the Government’s amendments, I am tempted to say that this one is minor and technical and hope it will slip through on the back of that. However, it is not. On the
	first day in Committee, our first amendment on decumulation was an attempt to ensure that the Government did not lose focus on ensuring that all pension savers obtain a good deal when they look to turn their pension pot into a retirement income. In that instance, we wanted to protect savers from being defaulted into an annuity without a recommendation from an independent broker.
	This amendment asks the Government not to lose sight of progress that has been made in getting a better deal for pension savers, despite the sweeping changes enabling freedom of flexibility in accessing pensions that will come into force this April. The cap that has been introduced on charges for work-based pension schemes of 0.75% a year has no equivalent in draw-down products, but from April a great many more savers—perhaps an estimated 320,000—will be using these products to get a retirement income. They should be protected from unfair charges. I repeat: they should be protected from unfair charges. It is welcome that NEST, the National Employment Savings Trust, has launched a consultation on draw-down products and how to ensure that middle and low-income earners have suitable and good-value products available to them. As the consultation rightly says:
	“The solutions we as an industry develop over the next few years could determine the lives of millions of people in old age. We absolutely cannot afford to fail consumers … Leaving their retirements to chance is not an option”.
	We have been clear throughout that welcoming the Budget freedoms is predicated on good solutions being available for savers in those income brackets, which we hope will happen. A good first step would be to remove the possibility of savers being open to what may be termed rip-off charges. This should apply in the decumulation stage as well as the accumulation stage, because a rip-off charge is a rip-off charge, wherever a consumer finds themselves at the end of it.
	What is the evidence that this may happen in the decumulation stage for draw-down products? We already know that charges can be varied and opaque. The report from Which?, The Future of Retirement Income, points out:
	“Even for a simple fund structure from a low-cost provider, the annual management charge might be 1% plus an administration fee of £250 per annum, which would cover the cost of income payments and income level reviews, for example. A more common total cost is about 2% p.a. which is similar to that for an investment-backed annuity. Worryingly, we came across cases where the charges for a SIPP package and advice were 4%-4.5%”.
	Our amendment would give the Secretary of State the power to address this. The report goes on to point out that the costs are not always clear to the consumer:
	“There are also hidden costs, including bid-offer spreads, the cost of sub-funds within the main fund, platform charges etc. Where an actively managed fund is selected, there is a risk that high turnover (churning) would add significantly to the total cost due to the transaction costs involved”.
	Remember, this is about a product that is likely to become a great deal more widespread from April. The report therefore recommends that the Government should consider the introduction of a charge cap on the DC decumulation market at the same time as this is made a requirement for auto-enrolment DC schemes.
	No one can be quite sure how the market will develop after April, but if the Government do not want to put this in place now, accepting our amendment would give them the power to take action to prevent consumer detriment in a new market in an area that has not always served savers as well as it should. This seems to me to be a sensible step that will protect consumers and ensure that they are not subject to rip-off charges. In that spirit, I hope that the Government will accept this amendment.

Baroness Drake: My Lords, from April 2015, when people reach the age of 55, they will be able to access their defined contribution pension savings as they wish. That will essentially leave them with four choices: full withdrawal of cash, taxed at their marginal rate, less a 25% tax-free lump sum; some kind of income draw-down product, drawing down cash while leaving the remainder invested; taking uncrystallised funds pension lump sums; an annuity purchase; or any combination of the four.
	We do not know how the market will evolve in light of the new unprecedented options for pension savers in terms of the retirement products that will be available and what their charges will be. However, we do know that the FCA thinks, first, that the new freedoms could weaken the competitive pressure on providers to offer good value, because people display even more inertia in the face of complexity; and, secondly, that providers have been struggling to complete proper due diligence testing on new products because of the tight timetable. We do not have clarity as to the Government’s thinking on the charges, quality standards and transparency requirements for retirement income products going forward.
	There is a significant risk that some individuals will be overtaxed because, in the face of complexity, people will get security from putting their savings in the bank. As the Strategic Society Centre suggests, instead of trying to understand the complexities of various retirement income products, people may choose to put their money into easy-access savings accounts which do not commit them to any course of action. Individuals can take 20% of their DC pot as tax-free cash and the rest at the marginal rate of tax, but an International Longevity Centre survey suggests that people do not understand the term “marginal tax rate”, and that this could result in them facing a significant tax bill, generating less income for their retirement. This may boost government tax revenues but it will also result in individuals having less to live on in their retirement. I fear that those with modest savings pots will be more vulnerable to being overtaxed than the confident, wealthier saver who can afford ongoing advice—a fear shared in a recent report by the Pensions Policy Institute and, indeed, by the FCA.
	An article in today’s FT refers to Channel 4’s “Dispatches” programme and to research by industry analysts that estimates that about £6 billion of cash—three times the government estimate of £2 billion—will be taken out of pension pots following the introduction
	of the new freedoms. The CEO of the FCA, Martin Wheatley, said in an article last weekend:
	“The beauty of an annuity is at least you make a decision. Faced with complexity … we prevaricate or put it off. And then we rely on very simple stimulus, so if someone says you can have £1,000 in the bank tomorrow if you make a decision, people are going to make snap judgements”.
	He added:
	“The worry is not those with the largest pots, but those with a £20,000 pot when the cost of providing advice may be excessive relative to the pot size”.
	In the face of that risk, the availability of well regulated, low-cost, low-risk ways of accessing pension savings efficiently on an income draw-down basis or through uncrystallised funds pension lump sums and reforms to the annuity market become even more important, particularly for lower and moderate earners.
	The Government have set a 0.75% charge cap for auto-enrolment default investment funds but there is no cap for retirement income products. The cost of income draw-down and the charges will come under intense scrutiny and fierce debate. The FCA market review has revealed that charges in these products can be high. Yet retail income draw-down products will not be scrutinised by the independent governance committees that have been put in place within the pensions industry. These products are not risk-free; savings remain invested. As these products become more of a mass market, I expect future savers to react to investment falls, charges and spending cash far too quickly.
	The FCA’s head of investment, David Geale, speaking to the Public Bill Committee, has already highlighted the risk of draw-down under the present range of products for those with pension pots worth less than £50,000. He added that,
	“there is no reason why over time flexible access products need to be poor value for money or to represent a high element of risk”.
	But he acknowledged that,
	“we will see how the market develops”.—[ Official Report , Commons, Taxation of Pensions Bill Committee, 11/11/14; col. 10.]
	If the evolving market starts to offer non-advised income draw-down products, particularly for those with smaller pots, the need for controls over charges becomes even greater. A key emerging issue is whether after April 2015 there will be income draw-down products suitable for modest-income pension savers. Because of the potential risks and costs to the consumer, the Government should take the initiative by embracing a power within the Bill to impose a cap on the fees and charges in a core of flexi-access draw-down products that could be readily available to ordinary pension savers.
	Uncrystallised funds pension lump sums—a catchy little title for a measure that will allow people to keep drawing lump sums from uncrystallised pension funds, with 25% of each sum tax-free and the remainder being taxed at their marginal rate, without having to crystallise the whole pension pot—are intended to form the basis of the Government’s pension bank account concept. It is a good concept but who will provide them? Employers may be reluctant to provide the facility through their company schemes. On the contrary, they seem increasingly inclined to ask ex-employees and pensioners to move their savings out of the company
	scheme. Therefore, it is likely to be industry providers that provide such a product. But what will their fees be for looking after people’s money and what will they charge every time someone takes money out of their pot? The amendment allows the Government to take the initiative to set a cap on the fees and charges that can be imposed by those providing access to uncrystallised funds pension lump sums—it is quite hard to say—so preventing poor value.
	The pension freedoms in the 2014 Budget still require a properly functioning annuities market and we will inevitably return, I believe, to a political recognition that it is in the national interest to have one. The ILC report has a section headed:
	“The catastrophic costs of taking money out of the pension and putting it into a savings account”,
	which concludes that if individuals tried to use their ISA to give them a comparable retirement income to an annuity, many would run out of money long before they died. Will the market promote a more flexible portfolio of annuities, such as deferred or fixed-term annuities? A lack of annuity contract standardisation has rendered price comparison websites ineffective and unfair sales practices have deprived pensioners of significant income. The open market option has not worked—perhaps it is time to look at more radical options.
	There is not time to meet all the challenges associated with the new freedoms in pensions before April 2015—this is work in progress for some time to come. But it is the right time to recognise that the Government should be given the powers to regulate and control the charges and the quality standards of these products. The pension freedoms announced in the Budget trust savers to make the right choices, but those right choices will not occur solely as a function of trust in the consumer; they require good behaviour by the providers. The Government have enshrined in statute the power to set quality standards and control charges in the market during the accumulation stage. This amendment would give the Government the ability to exercise such controls also on retirement products during the decumulation phase.

Lord Bourne of Aberystwyth: My Lords, I thank the noble Lord, Lord Bradley, for moving the amendment and the noble Baroness, Lady Drake, for her contribution.
	The Government take the issue of charges on pension products very seriously and are committed to taking action where there is evidence of consumer detriment. The Government’s announcement of a charge cap on default funds in pension schemes used for automatic enrolment—which, subject to the approval of noble Lords, will come into effect in April—amply demonstrates that commitment to act. However, I am pleased to be able to reassure noble Lords that this amendment is not necessary. There already exist regulation-making powers which allow the Government to cap charges on the new flexi-access draw-down funds. The Government took broad powers under the Pensions Act 2014 to limit or ban charges borne by members of any pension scheme. These powers would allow us to cap charges on draw-down funds offered by a pension scheme, including any new flexi-access draw-down funds, if this proves necessary to protect consumers.
	Similarly, the Financial Services and Markets Act 2012 gave the Financial Conduct Authority wide-ranging product intervention powers. Under these powers, the Financial Conduct Authority also has the ability to cap charges on draw-down products, including flexi-access draw-down funds where these are offered by insurance companies. These existing powers cover all the institutions which could offer such draw-down arrangements.
	I also reassure noble Lords that the Government and regulators are, as has been indicated, monitoring the development of new retirement income products, including the next generation of draw-down products, very closely indeed. In the publication of provisional findings from its retirement income market study, the Financial Conduct Authority has specifically committed to monitor how the retirement income market develops and to take action where appropriate if it sees sources of consumer detriment arising or if competition is not working properly in the market. In addition, again as mentioned earlier, the Financial Conduct Authority has also committed to undertake a full review of its rules in relation to the retirement income market which will commence in the first half of this year.
	Therefore, while the Government share the concerns that have been expressed about member-borne charges, we believe that this amendment is not required. I therefore hope that the noble Lord will withdraw this amendment.

Lord Bradley: I thank the Minister for his response and the noble Baroness, Lady Drake, for her very important contribution to this debate. I am pleased that the Government recognise that this is an issue and that the purpose of this amendment is entirely to protect the consumer in this matter. I hear the Government’s assurance that the powers to act already exist. What we all want to ensure is that the Government do actually act if it does turn out to be the case that excessive charges above what would be a reasonable capped level of such charges actually come into existence as new products come on to the market.
	If the Government are right that this amendment is not necessary, the test will be that they actually act in the interests of consumers in a timely way to ensure that they do not suffer the rip-offs that they have in the past in other circumstances. With those assurances, I beg leave to withdraw the amendment.
	Amendment 54A withdrawn.
	Clause 60: Sums or assets that may be designated as available for drawdown: Northern Ireland
	Amendment 55
	 Moved by Lord Bourne of Aberystwyth
	55: Clause 60, page 27, line 18, after “pension” insert “, nominees’ drawdown pension or successors’ drawdown pension”
	Amendment 55 agreed.
	Clause 60, as amended, agreed.
	Clause 61: Provision about conversion of certain benefits for drawdown: Northern Ireland
	Amendment 56 and 57
	 Moved by Lord Bourne of Aberystwyth
	56: Clause 61, page 27, line 36, leave out “or”
	57: Clause 61, page 27, line 36, at end insert “, nominees’ drawdown pension or successors’ drawdown pension”
	Amendments 56 and 57 agreed.
	Clause 61, as amended, agreed.
	Clauses 62 to 64 agreed.
	Amendment 58
	 Moved by Lord Bourne of Aberystwyth
	58: After Clause 64, insert the following new Clause—
	“Sections 60 to 62: consequential amendments
	“(1) In section 97AI of the Pension Schemes (Northern Ireland) Act 1993 (early leavers: cash transfer sums and contribution refunds - further provisions), in subsection(7)—
	(a) in paragraph (a), after sub-paragraph (vii) insert—
	“(viii) section 60 of the Pension Schemes Act 2014;
	(ix) regulations made under section 61 or 62 of the Pension Schemes Act 2014;”;
	(b) in paragraph (b), after sub-paragraph (v) insert—
	“(vi) section 60(3) of the Pension Schemes Act 2014;
	(vii) regulations made under section 61(4) or 62(4) of the Pension Schemes Act 2014.”
	(2) In Article 67A of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) (the subsisting rights provisions: interpretation), in paragraph (9)—
	(a) in sub-paragraph (a), after head (vii) insert—
	“(viii) section 60 of the Pension Schemes Act 2014;
	(ix) regulations made under section 61 or 62 of the Pension Schemes Act 2014;”;
	(b) in sub-paragraph (b), after head (v) insert—
	“(vi) section 60(3) of the Pension Schemes Act 2014;
	(vii) regulations made under section 61(4) or 62(4) of the Pension Schemes Act 2014.”
	(3) In Article 2 of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (interpretation), in paragraph (4)—
	(a) in sub-paragraph (a), after head (vii) insert—
	“(viii) section 60 of the Pension Schemes Act 2014;
	(ix) regulations made under section 61 or 62 of the Pension Schemes Act 2014;”;
	(b) in sub-paragraph (b), after head (v) insert—
	“(vi) section 60(3) of the Pension Schemes Act 2014;
	(vii) regulations made under section 61(4) or 62(4) of the Pension Schemes Act 2014.””
	Amendment 58 agreed.
	Clause 65 agreed.
	Schedule 4: Rights to transfer benefits
	Amendments 59 to 86
	 Moved by Lord Bourne of Aberystwyth
	59: Schedule 4, page 78, line 17, at end insert—
	“Judicial Pensions Act 1981 (c.20)
	A1 In Schedule 1A to the Judicial Pensions Act 1981 (transfer of accrued benefits), in paragraph 3, for “Chapter IV of Part IV of the Pension Schemes Act 1993” substitute “Chapter 1 of Part 4ZA of the Pension Schemes Act 1993”.
	Judicial Pensions and Retirement Act 1993 (c.8)
	B1 In Schedule 2 to the Judicial Pensions and Retirement Act 1993 (transfer of accrued benefits), in paragraph 3, for “Chapter IV of Part IV of the Pension Schemes Act 1993” substitute “Chapter 1 of Part 4ZA of the Pension Schemes Act 1993”.”
	60: Schedule 4, page 78, line 31, at end insert—
	“2A In section 24F (transfers out of GMP-converted schemes), in subsection (3), omit “guaranteed”.”
	61: Schedule 4, page 81, line 30, at end insert—
	“( ) In subsection (2), in paragraphs (a) and (b), for each “accrued rights” substitute “transferrable rights”.”
	62: Schedule 4, page 83, line 14, leave out “an occupational” and insert “a”
	63: Schedule 4, page 83, line 45, at end insert—
	“(xi) section 55 of the Pension Schemes Act 2014;
	(xii) regulations made under section 56 or 57 of the Pension Schemes Act 2014;”
	64: Schedule 4, page 84, line 13, at end insert—
	“(ix) section 55(3) of the Pension Schemes Act 2014;
	(x) regulations made under section 56(4) or 57(4) of the Pension Schemes Act 2014.”
	65: Schedule 4, page 84, line 23, leave out “a case” and insert “any other case”
	66: Schedule 4, page 84, line 29, leave out “any other case” and insert “a case not falling within paragraph (a) or (b)”
	67: Schedule 4, page 85, line 10, leave out “an occupational” and insert “a”
	68: Schedule 4, page 87, line 25, at end insert—
	“15A In section 101M (effect of transfer on trustees’ duties), for the words from “pension credit benefit” to the end of the section substitute “benefits to which the transfer notice relates”.”
	69: Schedule 4, page 87, line 43, at end insert—
	“( ) In that subsection, omit the definition of “pension credit benefit”.”
	70: Schedule 4, page 88, line 35, at end insert—
	“27A In section 124 (interpretation of Part 1), in subsection (1), in paragraph (b) of the definition of “transfer credits”, for “Chapter 5 of Part 4 of the Pension Schemes Act 1993 (early leavers)” substitute “Chapter 2 of Part 4ZA of the Pension Schemes Act 1993 (transfers and contribution refunds)”.”
	71: Schedule 4, page 89, line 30, leave out “In section 318 (interpretation),” and insert—
	“(1) Section 318 (interpretation) is amended as follows.
	“(2) In subsection (2), for “an occupational pension scheme” substitute “a pension scheme”.
	(3) ”
	72: Schedule 4, page 89, line 42, at end insert—
	“Scottish Parliamentary Pensions Act 2009 (asp1)
	37A (1) Schedule 1 to the Scottish Parliamentary Pensions Act 2009 (Scottish Parliamentary Pension Scheme) is amended as follows.
	(2) In paragraph 75, in Condition 6, for “section 93A(2)” substitute “section 93A(4)”.
	(3) In paragraph 91(2)(g), for “Chapter 4 of Part 4” substitute “Chapter 1 of Part 4ZA”.”
	73: Schedule 4, page 90, line 11, leave out “, in relation to an occupational pension scheme,”
	74: Schedule 4, page 90, line 21, at end insert—
	“Judicial Pensions Act 1981 (c.20)
	40A In Schedule 1A to the Judicial Pensions Act 1981 (transfer of accrued benefits), in paragraph 3, for “Chapter IV of Part IV of the Pension Schemes (Northern Ireland) Act 1993” substitute “Chapter 1 of Part 4ZA of the Pension Schemes (Northern Ireland) Act 1993”.
	Judicial Pensions and Retirement Act 1993 (c.8)
	40B In Schedule 2 to the Judicial Pensions and Retirement Act 1993 (transfer of accrued benefits), in paragraph 3, for “Chapter IV of Part IV of the Pension Schemes (Northern Ireland) Act 1993” substitute “Chapter 1 of Part 4ZA of the Pension Schemes (Northern Ireland) Act 1993”.”
	75: Schedule 4, page 90, line 35, at end insert—
	“42A In section 20F (transfers out of GMP-converted schemes), in subsection (3), omit “guaranteed”.”
	76: Schedule 4, page 93, line 30, at end insert—
	“( ) In subsection (2), in paragraphs (a) and (b), for each “accrued rights” substitute “transferrable rights”.”
	77: Schedule 4, page 95, line 15, leave out “an occupational” and insert “a”
	78: Schedule 4, page 95, line 40, at end insert—
	“(viii) section 60 of the Pension Schemes Act 2014;
	(ix) regulations made under section 61 or 62 of the Pension Schemes Act 2014;”
	79: Schedule 4, page 96, line 4, at end insert—
	“(vi) section 60(3) of the Pension Schemes Act 2014;
	(vii) regulations made under section 61(4) or 62(4) of the Pension Schemes Act 2014.”
	80: Schedule 4, page 96, line 14, leave out “a case” and insert “any other case”
	81: Schedule 4, page 96, line 20, leave out “any other case” and insert “a case not falling within paragraph (a) or (b)”
	82: Schedule 4, page 96, line 48, leave out “an occupational” and insert “a”
	83: Schedule 4, page 99, line 12, at end insert—
	“55A In section 97M (effect of transfer on trustees’ duties), for the words from “pension credit benefit” to the end of the section substitute “benefits to which the transfer notice relates”.”
	84: Schedule 4, page 99, line 30, at end insert—
	“( ) In that subsection, omit the definition of “pension credit benefit”.”
	85: Schedule 4, page 100, line 22, at end insert—
	“67A In Article 121 (interpretation of Part 2), in paragraph (1), in paragraph (b) of the definition of “transfer credits”, for “Chapter 5 of Part IV of the Pension Schemes Act (early leavers)” substitute “Chapter 2 of Part 4ZA of the Pension Schemes Act (transfers and contribution refunds)”.”
	86: Schedule 4, page 100, line 25, leave out “In Article 2 (interpretation),” and insert—
	“(1) Article 2 (interpretation) is amended as follows.
	“(2) In paragraph (3), for “an occupational pension scheme” substitute “a pension scheme”.
	(3) ”
	Amendments 59 to 86 agreed.
	Schedule 4, as amended, agreed.
	Clause 66: Restriction on transfers out of public service defined benefits schemes: Great Britain
	Amendment 87
	 Moved by Lord Newby
	87: Clause 66, page 30, line 46, leave out “subsection” and insert “subsections (2) and”

Lord Newby: My Lords, the purpose of Amendments 87, 88 and 89, which amend Clause 66, is to improve the drafting of technical aspects of this clause, which introduces restrictions on transfers out of unfunded defined benefit public service pension schemes to schemes from which it is possible to acquire a rise or entitlement to flexi-benefits. Amendment 87 ensures that the definition of unfunded public service defined benefit schemes applies where it is needed. Amendment 88 enables the Treasury to make regulations relating to public service pension schemes which can currently be made only by the Secretary of State. Amendment 89 ensures that certain regulations already in force will apply until new regulations are made under certain of the new powers provided for in this clause.
	Turning to the amendments in respect of Clause 67, as a reminder, I say that the purpose of this clause is to introduce a new safeguard for funded defined benefit public service pension schemes which gives Ministers a power to designate a scheme or part of a scheme, and in that way require the reduction of cash-equivalent transfer values in respect of transfers from that scheme to another scheme in which the member will be acquiring flexible benefits.
	Amendments 90, 91 and 92 clarify the schemes covered in Scotland by the new safeguard for funded defined benefit public service pension schemes, which is introduced in Clause 67. They ensure that only schemes which are public service pension schemes within the meaning of Section 1 of the Pension Schemes Act 1993 fall within the power introduced by this clause.
	Amendment 93 improves the drafting of Clause 67. Rather than speaking of “acquiring” flexible benefits, the clause will refer to acquiring a “right or entitlement to” flexible benefits, which is more accurate. Amendments 94, 95 and 96 amend Clause 69 to make provision for Northern Ireland parallel to that made for Great Britain by amendments described above. Similarly, Amendment 97 amends Clause 70 to make provision for Northern Ireland parallel to that made for Great Britain by the amendments described above. I beg to move.

Lord McAvoy: My Lords, I thank the Minister for his exposition. He sold me when he mentioned Scotland, so I think we accept that these amendments are genuinely minor and technical, although, to coin a phrase, we will reserve our position in case we discover something. I hope my noble friend Lord McKenzie of Luton can resist the temptation to jump up and shout, “Me too!”.
	Amendment 87 agreed.
	Amendments 88 and 89
	 Moved by Lord Bourne of Aberystwyth
	88: Clause 66, page 31, line 5, leave out subsection (4) and insert—
	“( ) After section 95(5) insert—
	“(5A) Except in such circumstances as may be prescribed in regulations made by the Secretary of State or the Treasury, subsection (2A) is to be construed as if paragraph (d) were omitted.””
	89: Clause 66, page 31, line 17, leave out subsection (9) and insert—
	“( ) Until the coming into force of the first regulations made under a provision of the Pension Schemes Act 1993 specified in the first column of the table, regulations made under the provision of that Act specified in the corresponding entry in the second column apply (with any necessary modifications) for the purposes of the provision specified in the first column—
	
		
			 New provision of Act Existing provision of Act 
			 Section 95(2A)(a)(iii) Section 95(2)(a)(ii) 
			 Section 95(2A)(b)(iii) Section 95(2)(b)(ii) 
			 Section 95(2A)(c) Section 95(2)(c) 
			 Section 95(2A)(d) Section 95(2)(d) 
			 Section 95(5A) Section 95(5)(a).” 
		
	
	Amendments 88 and 89 agreed.
	Clause 66, as amended, agreed.
	Clause 67: Reduction of cash equivalents: funded public service defined benefits schemes: Great Britain
	Amendments 90 to 93
	 Moved by Lord Bourne of Aberystwyth
	90: Clause 67, page 34, leave out lines 1 to 12
	91: Clause 67, page 34, line 13, leave out “, or paragraph 3(4)(b) of Schedule 2 to,”
	92: Clause 67, page 35, line 14, leave out “to (d)”
	93: Clause 67, page 35, line 25, after “acquiring” insert “a right or entitlement to”
	Amendments 90 to 93 agreed.
	Clause 67, as amended, agreed.
	Clause 68 agreed.
	Clause 69: Restriction on transfers out of public service defined benefits schemes: Northern Ireland
	Amendments 94 to 96
	 Moved by Lord Bourne of Aberystwyth
	94: Clause 69, page 37, line 31, leave out “subsection” and insert “subsections (2) and”
	95: Clause 69, page 37, line 38, leave out subsection (4) and insert—
	“( ) After section 91(5) insert—
	“(5A) Except in such circumstances as may be prescribed in regulations made by the Department or the Department of Finance and Personnel, subsection (2A) is to be construed as if paragraph (d) were omitted.””
	96: Clause 69, page 38, line 1, leave out subsection (9) and insert—
	“( ) Until the coming into force of the first regulations made under a provision of the Pension Schemes (Northern Ireland) Act 1993 specified in the first column of the table, regulations made under the provision of that Act specified in the corresponding entry in the second column apply (with any necessary modifications) for the purposes of the provision specified in the first column—
	
		
			 New provision of Act Existing provision of Act 
			 Section 91(2A)(a)(iii) Section 91(2)(a)(ii) 
			 Section 91(2A)(b)(iii) Section 91(2)(b)(ii) 
			 Section 91(2A)(c) Section 91(2)(c) 
			 Section 91(2A)(d) Section 91(2)(d) 
			 Section 91(5A) Section 91(5)(a).” 
		
	
	Amendments 94 to 96 agreed.
	Clause 69, as amended, agreed.
	Clause 70: Reduction of cash equivalents: funded public service defined benefits schemes: Northern Ireland
	Amendment 97
	 Moved by Lord Bourne of Aberystwyth
	97: Clause 70, page 40, line 1, at end insert “a right or entitlement to”
	Amendment 97 agreed.
	Clause 70, as amended, agreed.
	Clause 71 agreed.
	Clause 72: Meaning of “flexible benefit”
	Amendment 98
	 Moved by Lord Bourne of Aberystwyth
	98: Clause 72, page 40, line 35, after “scheme” insert “or a survivor of a member”
	Amendment 98 agreed.
	Clause 72, as amended, agreed.
	Clause 73: Meaning of “cash balance benefit”
	Amendment 99
	 Moved by Lord Bourne of Aberystwyth
	99: Clause 73, page 41, line 2, after “scheme” insert “or a survivor of a member”
	Amendment 99 agreed.
	Clause 73, as amended, agreed.
	Clause 74: Interpretation of Part 4
	Amendments 100 to 103
	 Moved by Lord Bourne of Aberystwyth
	100: Clause 74, page 41, line 34, at end insert—
	““nominees’ drawdown pension”, in relation to a survivor, has the meaning given by paragraph 27B of Schedule 28 to the Finance Act 2004;”
	101: Clause 74, page 42, line 5, at end insert—
	““successors’ drawdown pension”, in relation to a survivor, has the meaning given by paragraph 27G of Schedule 28 to the Finance Act 2004;”
	102: Clause 74, page 42, line 6, leave out “an occupational” and insert “a”
	103: Clause 74, page 42, line 13, at end insert—
	““uncrystallised funds pension lump sum” has the meaning given by paragraph 4A of Schedule 29 to the Finance Act 2004;”
	Amendments 100 to 103 agreed.
	Clause 74, as amended, agreed.
	Clauses 75 and 76 agreed.
	Schedule 5 agreed.
	Clauses 77 to 79 agreed.
	Amendment 104
	 Moved by Lord Balfe
	104: After Clause 79, insert the following new Clause—
	“Pension Protection Fund: compensation cap underpin (service-related)
	(1) Schedule 7 to the Pensions Act 2004 (pension compensation provisions) is amended as follows.
	(2) In paragraph 26 (compensation cap), after sub-paragraph (9) insert—
	“(9A) This paragraph is subject to paragraph 26B.”
	(3) After paragraph 26A insert—
	“26B (1) The relevant compensation payable to a person must in every case equal the lower of the amounts specified in sub-paragraphs (2) and (3).
	(2) The amount specified in this sub-paragraph is the sum of—
	(a) 50% of the annual value of the benefits to which he is entitled under the admissible rules; and
	(b) 2% of that amount for each whole year of the person’s pensionable service, subject to a maximum of 40% of that amount.
	(3) The amount specified in this sub-paragraph is two times the standard amount.
	(4) Expressions used in this paragraph have the same meaning as in paragraphs 26 and 26A.””

Lord Balfe: My Lords, I welcome the opportunity of being able to speak to this proposed extra clause at the end of the Bill. I will say straightaway that it is motivated by friends in BALPA, the union for pilots, but it also affects a number of other higher-paid workers who are caught by what many of us would regard as an anomaly in pensions legislation.
	The aim of the amendment is to ask for a review of the part of the Pensions Act that covers the limitation on funds that can be paid out to people whose pensions go into the Pension Protection Fund. In particular, I refer to pilots who used to work for Monarch Airlines—which has gone into the Pension Protection Fund—many of them with many years of service, but because of the cap that was put on payments out, they are limited as to the amount of pension which they can now draw. That cap was put into place for very good reason: to stop moral hazard; to stop directors who were members of their company pension fund abusing the fund knowing that they could basically transfer their liabilities for their own pensions to the Pension Protection Fund. However, the people who I am speaking about, such as the pilots of Monarch Airlines, are inadvertently caught. They had no say whatever in the way in which the company was run. They were workers for the company; they were higher-paid workers and were paid the sort of wages which you only get in the other House down
	the corridor—of course, if the House of Commons ever went into the Pension Protection Fund, many MPs’ pensions would be limited as well, but no one would say that they are the directors of a company. They are the MPs of the people and look after many things, but they would be caught.
	So the amendment is a measure to deal mainly with higher-paid workers, but workers who have none the less put in. We are very fond in this country of bashing anyone who makes anything that exceeds the higher-rate tax threshold, but there are many people who go to university, who work hard in our economy and who exceed the higher-rate tax threshold—they earn more than £40,000 or sometimes even more than that, and they do earn it. I have never been a subscriber to the view that we have to pay megabucks to everybody, but I have always been a subscriber to the view that a decently trained professional worker who is putting their efforts into the benefit of the country deserves a decent wage. These pilots are highly skilled people and deserve a decent wage, as do people at the Atomic Energy Authority and British Midland Airways who are caught. In this particular instance, of some 67 pilots, around 13 will lose more than half the pension that they have paid for. Part of the weakness in the Pension Protection Fund is that your levy is not based on how many workers are covered; it is based on the liabilities of your fund. If someone earns too much to get the full pension, you are still paying, as I understand it, a levy into the pension fund which is commensurate with the liabilities of the fund, not of the individuals.
	I am asking the Minister to look at the PPF cap and how it works. We are proposing two ways of dealing with it: either reviewing the cap on the basis of years of service over 20 years, as the current planned change would do little to help many of those in the pension scheme who are affected by the cap; or reducing the service-related or age-related underpin into the PPF. We are basically looking for a way of relieving those workers. It would be a comparatively cheap operation, largely because many people who earn a lot of money are in the PPF. It is estimated that the measure would cost something in the order of £12 million in all over all the years that the extra pensions would have to be paid, so it is not a huge amount of money.
	I am therefore asking the Minister to have a look at this matter. Clearly, the categories of people that I am speaking about are not the decision-makers and they should not be caught by moral hazard. They are well worthy of a review of the contributions that they have made and the way in which the PPF works. I have not made enough speeches in this House to know whether it is conventional to thank my colleagues opposite, the noble Lords, Lord Monks and Lord McKenzie, for their help in meeting the union that I have mentioned. I think that we are talking on a cross-party basis in asking for this matter to be seriously looked at by the Government. I beg to move.

Lord Monks: My Lords, I declare an interest as the president of BALPA. I congratulate the noble Lord, Lord Balfe, on the first pro-trade union speech from that side of the Chamber that I have heard since I came into the House—it was a pleasure to hear.

Lord Balfe: Did the noble Lord not hear my other speech?

Lord Monks: I am sorry, I did not, but this one made for a nice change and I commend that example to the rest of your Lordships on those Benches and hope to hear more remarks of that kind.
	The noble Lord, Lord Balfe, has admirably covered the BALPA case. Monarch Airlines is the current case, and BMI was the previous one. We are beginning to struggle as these airlines in trouble pass their pensions obligations over to the Pension Protection Fund. There are other similarly paid workers in the same category. I hope that the message of this amendment is that though this cap is essential—I understand that very well, as the noble Lord, Lord Balfe, does—in order to stop exploitation of the fund, which after all is contributed to by well run pension schemes around the country, it is very important that we take those obligations seriously.
	The cost to the fund is not enormous; it is quite modest. I hope therefore that the Government will consider the idea of a review of the arrangements around the cap and that we can get extra justice for some people who are hard working, who do responsible jobs, who are not fat cats and who deserve rather better than they have had recently from the fund. I am very happy to support the amendment in the name of the noble Lord, Lord Balfe.

Baroness Warwick of Undercliffe: My Lords, I want to make a brief comment on this amendment since I am a non-executive director of the Pension Protection Fund. I declare that interest and hope that I can offer some thoughts that may be helpful to the Committee. The PPF was set up by the Pensions Act 2004 to be a lifeboat for members of defined benefit pension schemes whose sponsoring employer has become insolvent, leaving the scheme in deficit. The PPF saves thousands of members from potential penury who otherwise would have received only a small fraction of the pension promised to them in their employer’s scheme. The benefits it pays to insolvent scheme members are paid for, in large part, by a compulsory levy on other DB schemes with solvent employers, which of course is a cost on the employer.
	When the PPF was set up, it was always recognised that there was a fine balance between on the one hand protecting those who had saved and who, through no fault of their own, were now the casualties of their employer’s insolvency, and on the other, not unduly penalising schemes which had made prudent assumptions or decisions, or employers whose businesses remain solvent, providing jobs and funding for their pension schemes. One way in which this was reflected was the benefit cap: the maximum benefits normally paid for someone who is not above the normal retirement age and drawing pension, are 90% of what the pension was worth, subject to a cap.
	The cap at age 65 is currently £36,401 per year, which equates to just over £32,500 when the 90% level is applied. The earlier a person retired, the lower the annual cap is set, to compensate for the longer time the person will be receiving payments. So the full expectations of high earners who have built up a number of years in their schemes would not be met. The average annual
	compensation in payment per member in the PPF is just over £3,500 per annum, so the average PPF member has clearly received less than the amounts which would have been earned by high earners such as those who would be affected by this amendment.
	The important point to note is that the PPF board has no role or responsibility in setting the financial limits in the fund. That is the responsibility of Governments. However, back in 2004 there was a general political consensus, which I believe still holds, that there was a need to balance the interests of members against the cost to those who fund the PPF—the levy payers, who ultimately are the employers and members of other pension schemes.
	There is obviously a debate to be had about appropriate levels of compensation. I have every sympathy with those who have been made a pension promise that their scheme can no longer afford. However, that is a matter for the Government and I do not want to comment on it, except to say that the PPF board has an obligation to keep the fund’s finances on a sure footing in changing economic conditions. It has a particular responsibility to balance its liabilities within a reasonable framework of constraints so that it does not impose an undue burden on the pension schemes and businesses which pay its levy. The PPF also has to be sustainable over the very long term, and the level of protection given to pension scheme members has to be such as to make that possible. The PPF has faced some significant calls on its resources as a result of big household names going bust. At November 2014, the net deficit of the 6,000 PPF eligible schemes is £221 billion. PPF provides a protective wrap for these liabilities in the event of insolvency. The amount of levy that would need to be raised to cover all members’ benefits in these schemes would be much higher.
	To add a final note of caution, requiring solvent employers with DB schemes to pay more levy for higher levels of compensation will not come without problems.

Lord Balfe: Is it true that the PPF currently has a surplus of £2.43 billion, out of which we are asking that this modest payment be made?

Baroness Warwick of Undercliffe: I do not think I should enter into a conversation about that and I do not think it is really relevant to this argument.

Lord McKenzie of Luton: My Lords, I thank the noble Lord, Lord Balfe, for giving us an opportunity to air this issue this evening and for organising a meeting with the Minister. I thank the Minister and his officials for participating in that meeting. No one can be comfortable with the position of employees in this situation, who approach retirement with a likely pension significantly below the expectation which is derived from an employer promise which can no longer be met. This is not diminished by the fact that, while the pension expectations would be well above average levels, they are commensurate with remuneration levels which reflect the skill of pilots and the responsible jobs they undertake. As we have heard, some 67 Monarch pilots will lose, in aggregate, some £900,000 a year in lost pension because of the operation of the PPF cap and other pilots are in a similar position.
	We should acknowledge that the Pension Protection Fund introduced by the previous Government, but on a cross-party basis, protects millions of people throughout the UK, as we have heard, who belong to defined benefit pension schemes. According to the Purple Book, which monitors the risk of DB schemes, there are some 6,057 mostly private sector DB schemes covering more than 11 million scheme members with more than £1 trillion of assets. In broad terms, as we have heard, the fund takes over the responsibility of pension obligations in the event of employer insolvency, but it does not seek to replicate, in every respect, the employer promise. There is, in particular, a cap on levels of payment for those below normal retirement age when the scheme enters the PPF. This is a source of the problem we are discussing tonight.
	We know that the PPF is a highly professional organisation dealing with a complex market situation with great skill. On recent data, some 745 schemes have been transferred, covering 217,000 members. Compensation paid to date amounts to £1.53 billion, but the average yearly payout is, as we have heard, some £3,500 only. Tens of thousands of people now receive compensation from the fund and hundreds of thousands will in the future, potentially making the difference between retirement in poverty and retirement in a degree of comfort. This may not be the occasion to discuss how the PPF will operate in shared risk schemes, but that is doubtless a matter we will return to at some stage.
	The thrust of the amendment in the name of the noble Lord, Lord Balfe, is generally to improve the position of those whose compensation is limited by the cap. The position of those with significant pensionable service with one employer has already been improved under the Pensions Act 2014, but this does not cover pilots, who tend not to have pensionable service substantially in excess of 20 years. Of course, the origin of the cap was to address issues of moral hazard, as we have heard, but also to be some restraint on the overall costs of the arrangements—it is not just a moral hazard issue. It is accepted that the moral hazard is not present in the case of pilots and the amendments would not lead to 100% compensation. However, the amendments would not apply just to Monarch; we simply do not know who might be entering the scheme at some future date and therefore the costs associated with that. As an aside, I ask the Minister: if the levels of compensation were raised, what if anything would that mean for the arrangements entered into with Monarch that allow for continued trading? Would that arrangement have to be recast?
	The bottom line is that amending the rules in the way suggested would lead to higher payouts from the PPF. That raises the question, as my noble friend Lady Warwick has made clear, of where the funding is going to come from. The answer, of course, is the levy, which ultimately feeds back to individual schemes and sponsoring employers. Although the amounts related to pilots may be relatively small in the context of the overall PPF scheme, we simply do not know how many more might be affected and what the overall costs would be. As I have just said, there was an attempt in the 2014 Act to ameliorate the effects of the cap for individuals whose pension entitlement was derived mainly from
	one source for at least 20 years, although this does not particularly help the matter in hand unless there were to be some recasting of the spread in coverage to affect it in a different way. However, presumably this would involve losers as well as gainers.
	It seems that any improvement in the lot of the pilots who might find themselves in a similar position, now and in the future, would involve more resources for the PPF. So, while having great sympathy for those whose legitimate pension expectations have been significantly impaired, I do not think we have been presented with a compelling argument to make the specific changes that the amendments suggest. However, the Government may take the opportunity to reflect on and review how the cap is generally affecting entitlements, bearing in mind the need to ensure the sustainability of the PPF in the current, and future, DB environment.

Lord Bourne of Aberystwyth: My Lords, I thank my noble friend Lord Balfe for so eloquently moving this amendment, and other noble Lords who have participated in this debate—the noble Lords, Lord Monks and Lord McKenzie, and the noble Baroness, Lady Warwick. I found the meeting very useful, and I assure the noble Lord, Lord Monks, that, as a former trade union member, I was certainly taking everything very seriously when he put forward the points that he made.
	The amendment relates to the position of certain members of pension schemes that have entered the Pension Protection Fund. I am sure that we all have a great deal of sympathy with the situation that these people find themselves in. This amendment, which offers two alternative methods of changing the cap, very helpfully allows me to talk to the Committee briefly about the level of the PPF compensation cap. I understand that my noble friend’s principle is that he would like an increase in that cap to provide higher compensation to those who had accrued a relatively large pension, but who, because they had relatively short service in their scheme, will not be affected by the long-service cap amendments. I will therefore deal initially with that principle rather than concentrating on the actual effect of this amendment.
	I start by making a small but perhaps important point: the loss of these pensions is not a consequence of the PPF cap. The fact is that the schemes were underfunded and could not meet the costs of the accrued pensions. Those pensions have already been lost. What we are discussing is the level of compensation that should be paid to the affected people.
	The Pension Protection Fund does not replace lost benefits in full. That is not an uncommon approach; for example, deposits in banks are covered up to a limit of £85,000. The PPF pays compensation at the full rate of the pension in payment at the insolvency date to anyone over their normal pension age. Pilots as a group, with their relatively low pension age of 55, benefit from this, as more of them are likely to be over that threshold than if the scheme had a more usual pension age of 60 or 65. It is those below their normal pension age who have their compensation set at broadly 90% of the pension accrued at the insolvency date. Further, it is this group—those below their scheme’s normal pension age—who are affected by the compensation cap.
	The current cap produces what many would think was rather a generous entitlement of £32,761 per year at the age of 65. The cap is of course reset for anyone who chooses to take their compensation at an age lower than 65, to reflect the longer period of payment. So a person with an unusual pension age of 55, such as pilots, would have a cap of £26,571 precisely. Noble Lords might also wish to be reminded that the Pensions Act 2014 contains provision for a long-service increase to the cap, which has been referred to during the debate, of 3% for each year of service above 20 years, although I accept this may not be relevant for many pilots because of the lower retirement age.
	Understandably, those affected by the cap compare the amount of compensation to what they expected to get from their pension scheme. However, that is not a valid comparison, at least in terms of how the scheme operates. As I have said, their pensions have already been lost, and if the scheme could have paid them more than the amount of compensation then it would not have entered the Pension Protection Fund in the first place. In answer to the point made by the noble Lord, Lord McKenzie, we would have to revisit the Monarch situation; although there is no intention of moving this cap, if we did then it would affect the Monarch arrangements.
	The question before us is whether compensation of £26,500 a year, or just over, for life from age 55 is acceptable. To put this figure into context, it is almost double the average occupational pension in the UK. In an ideal world, I am sure that we would all like the compensation paid by the PPF to be higher, although, if such an increase were possible, some would probably prefer it to be targeted at lower earners. I certainly do not want to clobber those people with a high salary who earn it, but I wish to act fairly here, as do the Government.
	The noble Lord has referred to an additional cost of £12 million. I have to say that I do not recognise that sum; the letter he wrote and the discussion we had refer to a cost of £70 million and the Government thought that that was on the low side, so I am not sure where the £12 million comes from. Regardless of the actual cost, however, any increase to the compensation cost must be paid for, so how could it be funded? To begin with, the compensation paid to others could be reduced, but I am sure that noble Lords are not advocating that approach. Another option is to increase the PPF’s income. Compensation is funded by a combination of the schemes’ remaining assets, investment return and a levy on ongoing schemes. If the money had to be found through an increase in the levy, the costs are borne by those schemes that are still backed by solvent employers. Some 78% of schemes eligible for the PPF were in deficit at the end of November 2014, and their aggregate deficit was £221 billion. Noble Lords may wish to consider whether this is the right time to be increasing their costs.
	Lastly, we could expect the PPF to absorb this extra liability. It is true that it currently running a surplus, and this is something the PPF can be proud of. I am very grateful to the noble Baroness, Lady Warwick,
	for her insights into its remit and work. Given that the number of schemes eligible to pay the PPF levy is declining, the PPF has taken the decision to aim to be self-supporting by 2030 so that it can continue to pay compensation, which could be necessary into the 22nd century. There are significant risks to this goal in terms of future levels of insolvency and scheme deficits. In view of this, the current surplus has, if I may put it in these terms, already been committed to help to safeguard the future.
	The Pension Protection Fund currently pays compensation to about 150,000 people and protects around 11 million scheme workers. We should be very cautious before we place any extra burden on the fund. The argument for so doing must be very strong and, respectfully, I do not think that it has been made out in this case. While I sympathise with those who have lost their pensions, as do the Government, they will still get a significant amount of compensation. I do not think that the position of people with capped compensation is so unfair as to justify putting an extra burden on to the PPF. I therefore urge my noble friend Lord Balfe to withdraw the amendment.

Lord Balfe: I thank the Minister for that reply, and I am glad that we have aired this problem. It often seems to me that we as a society are very good at concentrating on fat cats, who are seen as being unworthy, and thin cats, who are seen as being extraordinarily worthy, but we forget all the people in the middle—the people who work extremely hard, often for good salaries, to keep this country going. They do not live in Monaco, and they do not live on benefits either. There is a shortage of support for what I would call “the middle middle class”, which is reflected in both parties. We see here that classic private sector pension schemes are in the PPF and public sector pension schemes are underwritten. No one is going to take my pension away from me. HMG are not going to go bust and go into the PPF. The European Union is not going to go bust and go into the PPF. As Britain will find out if it tries to withdraw, it will get a rather large bill. However, I appreciate what the Minister and my colleagues said, and I beg leave to withdraw the amendment.
	Amendment 104 withdrawn.
	Amendment 105 not moved.
	Clause 80: Power to make consequential amendments
	Amendment 106
	 Moved by Lord Bourne of Aberystwyth
	106: Clause 80, page 45, line 4, leave out “The Secretary of State or the Treasury” and insert “The appropriate national authority”

Lord Bourne of Aberystwyth: My Lords, Clause 80 provides a power to enable the Secretary of State or the Treasury to make consequential changes needed to any primary or secondary legislation, whenever made. Clause 81 makes provision for the regulation-making powers that have been set out in the Bill and the procedure for exercising those powers.
	The amendments to Clauses 80 and 81 are technical and enable the regulation-making powers contained in the two clauses to be extended to the Department for Social Development in Northern Ireland in relation to Northern Ireland legislation. This will allow the Secretary of State for the Department for Social Development in Northern Ireland, who is responsible for social security benefits and pensions in Northern Ireland, to make consequential amendments to provisions in Northern Ireland legislation, where appropriate. In line with the provisions for Great Britain, including Scotland, where the powers are used to amend primary legislation, they are subject to confirmatory procedure, which is equivalent to the affirmative resolution procedure in this House. These changes and other provisions in the Bill allow the Northern Ireland authorities to maintain parity with pensions legislation in Great Britain. Clause 84 sets out when the different parts of the Bill will come into force.
	The Government have given a commitment that from April 2015 people will be able to access their pension savings flexibly. These amendments ensure that the regulation-making powers in Part 4 come into force on Royal Assent so that the relevant regulations can come into effect on 6 April 2015 in line with the commitment given. The amendments also ensure that amendments made to include reference to the Bill in the definition of pensions legislation in the Pensions Act 2004 come into force from 6 April 2015. I beg to move.

Lord McAvoy: My Lords, I thank the Minister for his exposition. Somebody must have told him about my Irish grandparents. That is the other side of my Celtic tradition. We accept that these are minor and technical amendments and have no objections to them, with the usual proviso.
	Amendment 106 agreed.
	Amendments 107 and 108
	 Moved by Lord Bourne of Aberystwyth
	107: Clause 80, page 45, line 7, after “any” insert “primary or subordinate”
	108: Clause 80, page 45, line 8, leave out subsection (3) and insert—
	“(3) In this section—
	“appropriate national authority” means—
	(a) in relation to provision which could be made by an Act of the Northern Ireland Assembly without the consent of the Secretary of State (see sections 6 to 8 of the Northern Ireland Act 1998), the Department for Social Development in Northern Ireland, and
	(b) in relation to any other provision, the Secretary of State or the Treasury;
	“primary legislation” means—
	(a) an Act;
	(b) Northern Ireland legislation;
	“subordinate legislation” means—
	(a) subordinate legislation as defined by section 21(1) of the Interpretation Act 1978;
	(b) an instrument made under Northern Ireland legislation.”
	Amendments 107 and 108 agreed.
	Clause 80, as amended, agreed.
	Clause 81: Regulations
	Amendments 109 to 111
	 Moved by Lord Bourne of Aberystwyth
	109: Clause 81, page 45, line 15, leave out subsection (2)
	110: Clause 81, page 45, line 20, leave out “an Act” and insert “primary legislation”
	111: Clause 81, page 45, line 27, leave out subsections (6) to (8)
	Amendments 109 to 111 agreed.
	Clause 81, as amended, agreed.
	Amendments 112 and 113
	 Moved by Lord Bourne of Aberystwyth
	112: After Clause 81, insert the following new Clause—
	“Regulations: Northern Ireland
	“(1) A power of the Department for Social Development in Northern Ireland to make regulations under this Act is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).
	(2) Where regulations made by the Department for Social Development in Northern Ireland under section 80 amend, repeal, revoke or otherwise modify a provision of primary legislation (whether alone or with other provision), the regulations—
	(a) must be laid before the Northern Ireland Assembly after being made;
	(b) take effect on such date as may be specified in the regulations but (without prejudice to the validity of anything done under them or to the making of new regulations) cease to have effect on the expiry of a period of 6 months from that date unless at some time before the expiry of that period the regulations are approved by a resolution of the Northern Ireland Assembly.
	“(3) Any other regulations made by the Department for Social Development in Northern Ireland under this Act are subject to negative resolution within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954 (c. 33 (N.I.)).
	(4) Subsection (3) does not apply to regulations containing provision under section 84(6) only.”
	113: After Clause 81, insert the following new Clause—
	“Regulations: supplementary
	(1) A power to make regulations under this Act may be used—
	(a) to make different provision for different purposes;
	(b) in relation to all or only some of the purposes for which it may be used.
	(2) Regulations under this Act may include incidental, supplementary, consequential, transitional, transitory or saving provision.”
	Amendments 112 and 113 agreed.
	Clauses 82 and 83 agreed.
	Clause 84: Commencement
	Amendments 114 to 116
	 Moved by Lord Bourne of Aberystwyth
	114: Clause 84, page 46, line 29, leave out paragraphs (b) to (e) and insert—
	“( ) any other provision of Part 4 so far as is necessary for enabling the exercise on or after the day on which this Act is passed of any power to make provision by regulations;”
	115: Clause 84, page 46, line 38, leave out paragraphs (a) to (c) and insert—
	“( ) paragraphs 24, 30, 33 and 36 of Schedule 2 (and section 46 so far as relating to those provisions);
	“( ) Part 4, so far as not already in force.”
	116: Clause 84, page 47, line 3, at end insert “other than paragraphs 24, 30, 33 and 36 of Schedule 2 (and section 46 so far as relating to those provisions)”
	Amendments 114 to 116 agreed.
	Clause 84, as amended, agreed.
	Clause 85 agreed.
	House resumed.
	Bill reported with amendments.

Elderly People: Powers of Attorney and Living Wills
	 — 
	Question for Short Debate

Baroness Bakewell: To ask Her Majesty’s Government what steps they are taking to encourage elderly people, including those with early-stage dementia, to prepare living wills and powers of attorney in anticipation of serious illness or degenerative disease.

Baroness Bakewell: My Lords, I am particularly grateful for the chance to debate dementia at this time both because it is timely—the national dementia strategy came to an end last year—and because there seems to be considerable movement on both the medical and the social care fronts in the approach to dementia sufferers and their carers. I know this because last December I wrote and presented a documentary for BBC Radio 4 about the subject called, “Suppose I Lose It”, and I learnt a great deal in preparing that programme.
	The dilemma at the heart of the debate as I proposed it is exemplified by the response it got. It was first referred to the Ministry of Justice as being a legal matter —just so; the lasting power of attorney is a legal document—but at my request it was rerouted to the Department of Health as primarily a medical matter. I am grateful for this, and I am particularly delighted that the noble Earl, Lord Howe, will be replying for the Government. However, in the wider world there is a risk that the matter of advanced directives and LPAs might fall between the two stools: the legal and the medical.
	Let me address the medical dimension first. There is a brief and to the point leaflet available at my local surgery, entitled Worried About Your Memory? The Alzheimer’s Society report tells us that dementia is the most feared condition among the over-50s. They are both fearful of knowing and ignorant of what might happen. This leaflet refers them to the Alzheimer’s Society, Britain’s leading dementia charity. It goes on:
	“The earlier you seek help, the sooner you can get information, advice and support”.
	There is a desperate need to know more and do more. Earlier diagnosis is the key that unlocks a whole raft of advice and behaviours that can help delay the progress of dementia and assist people to live well with it.
	In my Radio 4 programme, the actress Prunella Scales and her husband, the actor Timothy West, spoke frankly of their 15-year journey with her dementia and how they cope with it. After 15 years, she still beats him at chess. Judging by the public response to the programme, their openness did much to promote a willingness in others to speak out and to talk openly about what dementia means in people’s lives.
	The Government clearly recognise the importance of this. However, their plan to reward GP practices with a payment of £55 for each dementia diagnosis was strongly and rightly criticised by both the BMA and patients’ groups. The plan will fade out in March.
	The answer must surely lie with patients themselves. A strategy should address all those large numbers of people who have reason to be fearful, to offer them the chance of an assessment at a memory clinic. But—and it is a very important “but”—they will come forward for a diagnosis only if they feel that there is something that can be done; otherwise, they may prefer to live in denial and delay getting help. In response to my programme, many people said, “But I don’t want to know. There’s nothing you can do”. That is not the right message.
	What happens when you get a diagnosis of Alzheimer’s? The Alzheimer’s Society quotes a recent poll that found 90% feel unsupported after a diagnosis. The report Living and Dying with Dementia in England also stated that,
	“people with dementia are not being appropriately identified for end of life care, and that they have less access to, and receive poorer quality, care than people with other terminal illnesses”.
	The Dementia Action Alliance also finds the response far from satisfactory. Its recent Carers’ Call to Action makes constructive suggestions, including pre-diagnosis support from the GP; post-diagnosis education for the patient and their family; a dementia adviser or support worker to provide ongoing face-to-face personalised dementia expertise; a planned map of action for the future; and support to remain active and integrated in the community. Those are just some of the 20 suggestions. In some places, some of this is happening. In Scotland, a named link worker is made available for the first year after diagnosis. In England, the town of Crawley teaches the community’s waiters, teachers, shopkeepers and bus drivers how to recognise and then respond to dementia sufferers amongst them. We need more of these initiatives.
	I now turn to the legal aspect of this debate. The encouragement of elderly people, especially those with early dementia, to write an advance directive and sign a lasting power of attorney is most important. The response package to a diagnosis refers obliquely to the need to “plan for the future”. That is left deliberately vague, I think to avoid causing pain, but the pain from not facing up to these legal matters will be the greater the longer they are not addressed. The advice needs to be more clearly and regularly spelt out, and given more emphasis.
	The concept of capacity is what matters. The progress of dementia is medically unpredictable both in terms of the symptoms, and the timescale over which those symptoms progress. What matters for capacity is not the length of time since diagnosis, but the insight the
	person with dementia possesses at the time. Barbara Pointon, who wrote to me in response to the programme, said:
	“We were only just in time. Four months later and Malcolm”—
	her husband—
	“could no longer sign his name”.
	That was in 1993, before the Mental Health Act. She went on:
	“No one told me about Lasting Powers of Attorney”—
	as it was then—
	“I just picked it up by chance … but it is an essential document and should be tackled early”.
	However, the LPA is a long and difficult document to handle; it is also costly to register. The noble Baroness, Lady Afshar, who apologises for not being able to join the debate, teaches law and said of the LPA:
	“I have found the form for giving lasting power of attorney exasperating … I had to make the application 3 times, each time needing signatures from witnesses and attorneys and all corrections have to be made in 15 working days”.
	She goes on:
	“I cannot see how the average little old lady would be willing to go through all these hoops”.
	She is not the only Member of this House to have reported the same complaint to me, so improvements need to be made there.
	The need for people with early dementia to sign such documents at the earliest moment is evident. In November last year, an International Longevity Centre report urged policymakers to ensure there are no unnecessary barriers to data sharing between health and social care services and the family, and went on to say that there needs to be,
	“a major public relations programme to make more in the population at large”,
	aware,
	“of the ways in which they can make things easier for themselves and their loved ones by planning ahead”.
	Last October, Age Scotland launched just such a national campaign, funded by the Scottish Government, urging people to take out a power of attorney. It remains to be clarified whether an LPA in Scotland will be recognised across the UK. Dementia is something we all fear for ourselves and for those we love. I ask the Minister and the Government to take steps to answer the needs expressed here with the utmost urgency and, indeed, sympathy.

Lord Hodgson of Astley Abbotts: My Lords, I begin by thanking the noble Baroness, Lady Bakewell, not only for giving us the chance to debate this important matter, but for having introduced the whole subject with such a clear and informative exposition which has laid out very clearly the challenges we face.
	In my few moments I do not want to merely repeat much of what she has said. I found her arguments persuasive, and I agree with them in large measure. I want to raise an associated issue which concerns wills, powers of attorney, and the flow of funds to voluntary groups, many of which are providing services to dementia sufferers. Like the noble Baroness I fear there is another issue which may be falling between different governmental
	stools. Some noble Lords will be aware that I undertook the review of the Charities Act for the Government. A couple of years ago I produced a report about it entitled
	Trusted and Independent: Giving charity
	back to charities
	. There were a number of proposals to try and improve the position of charities, some of which have formed the basis for legislation now before your Lordships’ House, including the Protection of Charities Bill, which is in pre-legislative scrutiny. One issue that was raised was the number of charities. There are over 160,000 registered charities, and probably as many again unregistered charities, so in all a third of a million charities. There were great concerns about duplication. Many members of the public felt that charities were overlapping and that money was being spent on administration and fundraising which could be better deployed in providing the services for which the charities had been established in the first place.
	There is room for a debate on that topic, but not tonight. The freedom for people to decide what they do with their voluntary giving seems a pretty important principle. But there is an issue as to why charities do not merge. In my research, this is for one of two reasons. One is amour propre among the trustees, they cannot bear to collaborate and they would rather work on their own than work together. But there is another important technical reason that concerns bequests and wills. This is where we come to the relevance of our debate tonight. As many Lords will know, bequests and wills are a very important source of fund-raising for charities, but they obviously take time to emerge because unfortunately it requires the person who made the bequest to die before the money changes hands. Importantly, where two charities merge, and as a result one disappears, a bequest to the latter may well be null and void unless the wills are drawn appropriately widely.
	I will give a quick example. Let us assume that the noble Baroness, Lady Bakewell, and I have both set up separate dementia charities, and after a period of time we agree that we should merge them. We go to the Charity Commission, we get it blessed, and it is all done properly and above board. We also agree that because her charity is larger and more famous than mine, hers should be the surviving charity, and that the Hodgson charity should just disappear. But if the Hodgson charity was hoping for a legacy, it may be that because of the way trust law is drawn, that bequest will be null and void, because there is no longer a Hodgson charity to which the bequest can go, and therefore the bequest must go back into the estate from which it was originally drawn. That seems to me an entirely counterintuitive outcome. The person leaving the money wishes to leave some to the dementia sector, and the merger has been approved by the regulator—so why should the bequest then fall foul of what I would consider a narrow technicality? I understand that that is not my noble friend’s direct responsibility, but I use this opportunity to urge him to remind his colleagues in the Ministry of Justice and the Cabinet Office, as well as the Law Commission, that there is an issue here that is worth tackling. It applies with equal force to powers of attorney, to which the noble Baroness referred. As people live longer, there may be longer periods when they are not compos mentis. The role of family members and advisers holding a power of attorney
	needs to be similarly properly and widely drawn to avoid the counterintuitive outcomes that I have just described. I am not clear whether the prescribed form of the lasting power of attorney has sufficient flexibility built into it to enable this to happen.
	Finally, this issue also applies to standing orders and direct debits. Banks will refuse to redirect such payments to the surviving entity. Instead, they require all direct debits and standing orders to be re-signed. Noble Lords will be perfectly aware that if you tried to get all direct debits and standing orders re-signed, the fall-out rate would be very high indeed, with a very big consequential loss of funding to the charity hoping to receive them.
	To conclude, the issue of the implications of dementia is an important and growing topic. My intervention seeks merely to urge the Government to ensure that legal practices are kept up to date with the evolving conditions of our society and, in so doing, maintain the badly needed flow of funding to charitable and voluntary groups, dealing with the very difficult problems of our society, including dementia and other progressive diseases.

Baroness Flather: My Lords, the noble Baroness, Lady Bakewell, has brought to us a subject that we all need to consider. I cannot see anybody here who is a child anymore, and I think that it is important for us to think about this. I have always felt that in this country—and maybe in other countries as well—people do not want to think about the end of life. They are frightened of dying. It is a very strange thing, because the one thing that we are certain of we are most frightened of, and you would think that that was very strange indeed. I do, because I have never felt frightened of dying. When I was 12 years old, I remember very clearly thinking at bedtime, “What is it that I would have done if I do not wake up tomorrow morning?”. It does not make a lot of sense, but at least I thought about it and it did not worry me. It actually made me think about things that I should try to do.
	If you try to talk to people about dying, they are upset. You cannot even use the word “death”. You have to say “passed away” or “not with us any longer”, or use other euphemisms. As human beings, we all have to accept the inevitability of dying. Therefore, like anything else that we arrange in our lives, we should arrange our death. We should plan what we want done when we die, and how it should be done. We should plan around our own personal worries about being ill and sick and having dementia—anything and everything.
	The idea of making advanced decisions and having a lasting power of attorney are excellent, but how do you access the wishes of that person? I have looked through all the bits of paper that I have seen, and there is nothing that tells us how it can be done easily and clearly. We very much need to concentrate on the decision of the person who is ill and may be dying, who does not want to be resuscitated time and again. There are cases of people being resuscitated three or four times in a matter of months. That is just not right in the sense of humanity—it is not right for that person. There is no quality of life for that person.
	I first read about Dr Gawande in a wonderful article in the New Statesman. That man has his finger on the absolute pulse of what we need to be doing and thinking about. He believes in looking after people, but he also believes in respect for the patient’s views, to the point when he says that the time may come when a patient needs to be able to ask for assisted dying. That man must have a most wonderful understanding of human beings, and the more that we follow what he suggests, the better we will be.
	I hope that we can find a way in which to make sure that our advance decisions, such as through the LPA, are there to let everyone know our wishes. We would like to know that whatever we have wished for will be accessed before it is too late. There is talk about a national database, but could we not wear a little bracelet like the Medic Alert bracelets, when we are getting very ill, which would say, “Please look at the database for my wishes”? At least that way people cannot say, “Oh, we did not know that you had wishes”. That is the point—whether anybody knows that you have wishes. I am hoping that my son will have power of attorney for me, but he is a doctor, so it is very simple for me. Not everyone has a son who is a doctor, however, and it is very hard even for family members always to make the right decisions. Therefore, discussion between the parent and the attorney or child is essential.
	I hope that something will come out of this discussion and that we will have some way of actually finding out what the person’s wishes are. The noble Baroness, Lady Bakewell, said that it is very difficult to make a power of attorney. She referred to the experience of the noble Baroness, Lady Afshar, who took a very long time to do it. That is ridiculous: if you are trying to do something, and it is so difficult to do, then obviously a lot of people will be put off from doing it. It seems such a good idea that it should not be difficult to do it, and it should be possible to simplify the forms. I hope very much that something will be taken back and we will be assured that we can make decisions while we are capable and that they will be followed.

Lord Joffe: My Lords, I enthusiastically support my noble friend’s Question to Her Majesty's Government and concur with everything that she said in her impressive opening speech. The issue of advance decisions is not a minor one and must be addressed. With an ageing population and much suffering towards the end of life, it is of critical importance because every one of us will die one day and we would all wish our last days to pass with a minimum of suffering and with the care and treatment that conforms to our wishes. Advance decisions are the key means of achieving this, as otherwise it may be too late if we have lost the ability to communicate.
	I speak with some authority on the issues raised, as I was diagnosed with having signs of early Alzheimer’s disease five years ago. However, I was fortunate in receiving invaluable advice from my NHS GP and consultant. This was that, while current treatments did not slow the underlying disease, there were treatments available that would provide symptomatic benefit in coping with the disease. More importantly, the advice was that I should start to wind down my commitments
	and plan my future. Following this advice enabled me to eliminate my worries about losing my memory and to plan the rest of my life. I strongly endorse what my noble friend has said about the importance of early diagnosis. It seems to me that a responsible general practitioner should be considering with elderly patients, and taking up with them, the issue of how they want to plan the rest of their lives.
	As part of this planning process, advance decisions are the natural way to ensure that their wishes are followed as to how they would like to be treated and cared for when they no longer have the capacity to make such decisions themselves or to communicate. Advance decisions are not only about refusing aggressive medical treatment to prevent intolerable suffering. They can, and should where possible, go beyond that to record the patient’s decisions and wishes—for when they no longer have the capacity or cannot communicate —on their treatment or non-treatment, on who should care for them, on how their costs should be provided and on the extent to which they would hope their families and loved ones would care for them. They may or may not decide to include a request to reject aggressive medical treatment in order to prolong their lives, but the importance of recording their wishes for their end of life is paramount. Unfortunately, the current evidence is that only about 4% of UK citizens have signed advance decisions. This contrasts with the position in the USA, where such decisions are common and are encouraged by positive legislation in most states. Indeed, President Obama in 2009 announced that he and his wife had living wills and encouraged everyone to have one.
	In 1998, a document called Five Wishes was prepared with the help of the American Bar Association in the USA. It combined the living will and healthcare power of attorney. The five wishes include the kind of medical treatment the person wants or does not want; the kind of “comfort care” they would like—which embraces pain management and palliative care—and what they would want their loved ones to know, such as forgiveness and final wishes for burial and memorials. According to Wikipedia, more than 18 million copies of this document have been distributed worldwide.
	It is encouraging that the Government have expressed their support for addressing the issue of advance directives. However, comforting words and setting up forums are not enough to lead to change in the foreseeable future. What is clearly needed is speedy and energetic government leadership, including appropriate resources, to achieve real change in one of the most important areas in which an ageing population needs support. More particularly, the Government should actively promote to patients the need for an advance decision and for the NHS to ensure that all health providers, including the GPs and the hospital and ambulance services, have appropriate procedures for recording and making accessible advance decisions to their staff before patients with life-threatening illnesses or injuries are treated.

Baroness Greengross: My Lords, it is a privilege to take part in this debate. I declare an interest—apart from my involvement in the International Longevity
	Centre—as chair, and now co-chair with a Member of the Commons, of the All-Party Parliamentary Group on Dementia, as ambassador for the Alzheimer’s Society and as a “dementia friend”. I congratulate the noble Baroness, Lady Bakewell, on initiating this debate. It is important and has covered a whole lot of areas. I very much agree with her and my noble friend Lady Flather, because one of the issues that the noble Baroness talked about was our unwillingness to face the issue of dying. We forget that dementia is a terminal illness and, if we are going to get things right, we have to be able to talk about dementia as we can now, thankfully, talk about cancer much more easily than we used to be able to.
	Although we can talk about dementia a bit more, we do not all realise that there are more than 100 different types of dementia, and some of them are illnesses that enable people to slip in and out of mental capacity and spend a long time being at least partially capable of making decisions and planning their future—in other words, being mentally competent. We all have a certain amount of pride. We want to be sure that we are remembered with some dignity and that some of our dearest wishes will be complied with if we are unable to make sure ourselves that they happen.
	It is understandable that everyone is frightened of dementia, because it is now the leading cause of death in women in this country, and the third leading cause of death in men. More than 80% of people in care homes have dementia or significant cognitive problems. It is not a minority issue but it affects so many people. It does not affect just the person with dementia; it affects particularly that person’s carer and sometimes many more people in the family and the immediate friends of that person. Carers do a most amazing job, and I congratulate the Government on having given carers more rights in the Care Act, which is important.
	However, one of the most popular areas of advice sought from Carers UK is the Mental Capacity Act. Carers’ thoughts and wishes can be looked at much more easily if a lasting power of attorney has been appointed, because the carer and the person with dementia can rest more easily knowing that the plans for the future will be carried out in accordance with his or her wishes. Many people feel tremendous responsibility that, when they cannot manage their affairs by themselves, their children should not be faced with terrible decisions. They want—I want, and I am sure many noble Lords want—to be sure that there are plans in place so that our wishes can be carried out, and that we do not present our children with dreadful problems and responsibilities. If they have to make decisions, they must try to make sure that they correspond with our wishes.
	We are quite accustomed to knowing about this when it comes to money. We know that we can, or have been able to for a long time, make decisions about our money, but very few people know that the lasting power of attorney now includes decision-making possibilities about our health plan. People would be hugely eased if this was better known—if the information was more available. In fact, the lasting power of attorney can deal with our health issues and our welfare issues, as well as our financial issues, and help us to feel relaxed about how our children are going to deal with the
	future, when we die. They can be carried out, but only if we are all clear about the procedures. It is very important that people do not forget to get things in place in time, as the noble Baroness, Lady Bakewell, made quite clear. The lasting power of attorney can make it very clear who is going to make decisions, which adds to the dignity of the person who has dementia and is going to die at some stage. It is that person’s wishes and advance decisions, not other people’s, which will be taken as read.
	It is very important that those caring for people with dementia know that they can get the right advice. I would like to see an Admiral nurse available to every family dealing with dementia. That is not going to happen for a long time, but we need more Admiral nurses and more volunteers for the early stages, so that everybody who is diagnosed—and we need more than 50% of people to be diagnosed—has access to help and advice, either from a volunteer or, later on, from a person who knows enough about the situation to take someone’s hand, whether that is the carer’s or the person’s with dementia, and guide them through this very difficult maze of questions that require answers. If we can do that, we will make life better for people with dementia and those who are affected along with them.
	I hope that the Minister will make sure that the Prime Minister’s and the Government’s wonderful achievement in getting a G8 discussion to focus on dementia happens and will be carried forward. It will happen: it will happen with the global envoy; with the national plan, which must be renewed; with the increase in money for research, which must be continued; and with a commitment from everybody in power in this country to make sure that dementia is in the forefront of our thoughts. It is very important and I am sure that the Minister feels the same way.

Baroness Wheeler: My Lords, I, too, congratulate my noble friend Lady Bakewell on securing this key debate. Like other noble Lords, I am a huge admirer of her campaigning work on behalf of older people, her mission to get us talking openly and frankly about the ageing process and especially about dementia—drifting into this “unknown world”, as she referred to it in her excellent Suppose I lose it? programme—and her willingness to relate and talk about her own experiences, asking the question that all of us ask ourselves as we get older about whether our memory loss or lapses are just an only-to-be-expected part of the ageing process or represent the early stages of dementia. I really liked her reference in the programme to being as busy and involved as she ever was and to the fact that, despite her fears, if dementia was looming she simply did not have the time to notice it. I hope that that is the case with us all. She is certainly right that staying alert for symptoms and confronting fears early is the best way to grow old.
	My noble friend has focused on the urgent need to address end-of-life care for people with dementia and the excellent recommendations set out in the Dementia Action Alliance’s The Carers’ Call to Action. Encouraging
	the preparation of living wills and LPAs also applies to serious or degenerative illness and long-term conditions where, although the person is stable and may have a good quality of life for many years to come, the unknown can still be expected, such as with stroke or heart disease. Although we all agree the need to keep hammering home the message about preparation for what is or may be to come, going down the actual route of finding out about and preparing documentation and legal forms before anything happens is something we just do not like to face or we put off.
	On dementia, it is important to encourage early stage sufferers to take out advanced directives or statements, or a personal welfare LPA. However, we have to recognise that the growing problem out there relates also to finance and resources issues, with legal disputes over wills made by dementia sufferers rising sharply. In the Newcastle Journal, a recent article reported that a local firm of solicitors estimated that disputes involving cases where wills were contested as having been made by people lacking the appropriate mental capacity had risen by over 50%.
	Some of those claims related to wills made by people who did not know that they were suffering from dementia at the time, or they involved people who, because of fear and stigma, did not tell the solicitor about their illness and therefore the solicitor was not able to undertake any process to try to test their mental state or capacity. Where property and assets are involved, we also need to stress the importance of good legal advice to avoid vulnerable people making wills that turn out to be invalid, and of taking out the finance and resources LPA, conferring powers for people to act on their behalf if they become incapable of doing so themselves.
	As well as being costly, the process of preparing an LPA is daunting. As you get older, understanding the legal processes and documentation, as well as appointing attorneys and replacement attorneys, become more and more difficult, as your contemporaries and the people you would trust to do this are the same age as you and you fear that they may pop off before you. Children and family members undertake this role but, in the case of single people without family, it can be a real obstacle. Affordability is also a key issue for probably most of the vu1nerable people we are talking about. Many solicitors undertake this work on a fixed-fee basis, but the leader of our local carer support organisation, of which I am a trustee, recently told me that for most of the carers and cared for whom we deal with, being unable to afford the legal costs was a major issue.
	Thankfully, however, the advance decision or statement process is straightforward, and I commend the excellent Age UK factsheet covering this. I wish that I had seen it when our family was experiencing the first hours of my partner’s major stroke seven years ago—or, obviously, ideally beforehand. The Alzheimer’s Society’s two-page advance decision form is also excellent. I hope that it is out there in GPs’ surgeries, hospitals and hospices so that professionals can guide patients and their families to it. There was no advice at the hospital or talk with me or our family about these issues from medical, nursing or any other staff when my partner faced a
	really critical 24 hours in A&E and the ICU. I hope that these processes have now much improved and that the Minister can reassure me that he is confident that that is the case.
	The developments in medical science mean that more lives are now saved than ever before, but they also mean that preserving life without any real hope of a full recovery are ever more real. The advance decision and statement process recognises that competent and informed adults who are capable of understanding the implications of their decisions have an established right in common law to refuse medical procedures or treatment.
	My noble friend stressed the importance of medical and social care advice and support for patients contemplating living wills and for their carers and families. It is all part of the vital communication process that needs to take place with people facing long-term or terminal illness concerning the reality of their situation and the impact of the treatment options, as well as the need for a meaningful discussion about their end-of-life wishes. The medical and nursing professions have improved considerably at having these conversations with patients, and the hospice movement has led the way on this. However, the experience of patients and carers shows that there is still much to be done to improve medical and nursing skills in this regard, and I hope that the Minister will be able to tell us how training and development issues are supporting this.
	I was fortunate to be present at one of last year’s Radio 4 Reith lectures by Atul Gawande, the American physician, well known international lecturer and New York Times columnist, which led me to read his recent book, Being Mortal: Illness, Medicine and What Matters in the End. This deals with end-of-life care and how difficult it is for surgeons and other medical staff to have the “hard conversations” with patients that need to take place.
	Although set in the context of the American healthcare system and focusing mainly on people with terminal illness, the case studies are of US Medicare and hospice care, so they have a strong resonance with our experience here. Dr Gawande describes pretty graphically how difficult it is for medics to discuss with patients what he calls the “larger truth” about their condition and the ultimate limits of doctors’ capabilities in treating them, let alone what matters most to patients when they face serious or degenerative illnesses or they near the end of their life. It is a very thought-provoking book and I commend it to noble Lords as it deals with the importance of trying to ensure that patients are not kept alive artificially if suffering from a terminal illness.
	In a hospital in Wisconsin, over a number of years a systematic campaign took place to get medical staff and patients to discuss end-of-life wishes. This was developed into a hospital-wide standard procedure with the use of a multiple-choice form, much along the lines of our advance decision process but with a more detailed questionnaire. In time, 85% of patients who died in that hospital had a written advance directive, and doctors virtually always knew of the instructions and followed them. I quote from the book:
	“This system meant that people were far more likely to have talked about what they want and what they don’t want before
	they and their relatives find themselves in the throes of crisis and fear. The discussion, not the list of questions, was what mattered most”.
	I conclude by underlining my noble friend’s reference to the national dementia strategy, which urgently needs to be updated, and echo the calls made in her programme by Professor Rowan Harwood for it to address how we actually care for people with dementia and support the carers and care workers that care for them. His work at the Queen’s Medical Centre in Nottingham in adapting Ward B47 to meet the complex needs of patients with dementia seemed to display the understanding about care and treatment that we must aim for in the future. It also resulted in savings in hospital costs, so I look forward to the Minister’s comments on this.

Earl Howe: My Lords, I am very grateful to the noble Baroness, Lady Bakewell, for bringing this important issue to the House. At a time traditionally associated with making resolutions it feels like a particularly appropriate moment to be considering how we plan for later life together with our families and loved ones. I hope she will agree with me that the contributions from all speakers this evening have combined to make for an excellent debate.
	I am sure all noble Lords would agree with the basic premise that all citizens should be cared for and treated in a manner that they themselves would choose, at a time in their life when they may no longer be able to make decisions themselves. The Mental Capacity Act 2005—the MCA—provides the legislative framework for how caregivers should support individuals who may lack the mental capacity to make decisions themselves. The Act and its associated code of practice emphasise the importance of treating each person as an individual and of seeking out their particular wishes and preferences, to ensure that any decision made is in the best interests of that person.
	Noble Lords will, I am sure, be aware of the excellent work of the Select Committee of this House which scrutinised the implementation of the MCA last year. Its report, published in March 2014, highlighted that awareness of the Act was poor and that as a result many individuals were not aware of or taking up their legal rights. The Government embraced this finding and set out a programme of work in our response, which was entitled Valuing every voice, respecting every right. The response sets out the great challenge we face—essentially that of bringing about a change in culture whereby individuals are comfortable talking openly with friends and families about their wishes for later life and where wider society treats those who lack capacity with the same respect as those who have capacity.
	The noble Baroness asked specifically about lasting powers of attorney—LPAs, to use the abbreviation—and living wills. An LPA allows someone with mental capacity to appoint an attorney to look after their affairs in the event that they lose capacity at some point in the future. As well as the traditional property and finance LPAs, the MCA legislated for health and welfare LPAs, which, I believe, are the focus of the noble Baroness’s question. There are currently more than 1.3 million LPAs registered, and applications are increasing at a
	rate of 20% year on year. This is good news, but we do not intend to rest on our laurels, especially when we look into the statistics and see that for every three finance and property LPAs registered, only one health and welfare LPA is recorded. The Office of the Public Guardian, which has responsibility in Government for registering LPAs, is using all available opportunities to raise awareness of LPAs through conference events, media engagements and work with multiple partners across finance, legal, health and care settings.
	A number of noble Lords voiced concerns that executing an LPA is difficult and complicated. A good example of recent success is the LPA digital tool. This tool allows applicants to enter all the required information step by step on a personal computer and then simply print it out, add the relevant signatures, and send it to the OPG. This on-line service was the first so-called “government digital exemplar” to pass the Government Digital Service’s stringent new 26-point test. We believe and hope that this user-friendly service will help drive further increases in LPA registrations.
	In 2015, the Department of Health and the OPG will continue to work closely to raise awareness of health and welfare LPAs. The department is in the final stages of production of a statement of rights which will inform the public about their rights under the MCA, including their right to make an LPA. In addition, the OPG is looking at how LPAs are used and will look to include use within the NHS as part of this project. This should lead to potential new guidance for the health system on LPAs.
	Noble Lords will I am sure be aware that overall policy responsibility for the Mental Capacity Act lies with the Ministry of Justice. This was referred to by the noble Baroness, Lady Bakewell. I can inform the House today that the Ministry of Justice plans to run a campaign to raise public awareness of the options for planning for the future and encourage members of the public to think about what would happen in the event of their death or if they lost their mental capacity and needed someone to make decisions for them.
	As for living wills, an issue which was mentioned by a number of noble Lords, the House will be aware that this term has no strict legal meaning but in common usage can be taken to describe an individual’s wishes and views about any future medical treatment or indeed any other care, support or lifestyle preferences. An advance decision to refuse treatment however does have a specific legal meaning under the Mental Capacity Act. End-of-life decisions are intensely personal matters. As individuals, our views on how we would like to be cared for can change over time, even when we still have full mental capacity. The Government’s policy is to seek to ensure that individuals are aware of their rights under the law—to make them aware that they have the choice to make a living will or advance decision to refuse treatment—but fundamentally to allow the individual to decide if they want to exercise this right. Our awareness raising efforts here are tied closely to our work to raise understanding of the wider provisions of the MCA. This work is multi-faceted: professional training, which I will mention again in a moment; revising our national governance structures;
	and ensuring that the MCA is a key line of inquiry in the Care Quality Commission’s new inspection model for care homes and hospitals.
	The noble Baroness, Lady Bakewell, cited various obstacles which she felt can deter people from registering an LPA. One of these was the cost factor, which was also mentioned by the noble Baroness, Lady Wheeler. The OPG appreciates that the cost of making an LPA may be an important factor for those who wish to plan ahead. The cost of an LPA is £110. LPA forms, however, have been designed so that they can be completed without a solicitor. However, if a person chooses to seek advice from a solicitor they will have to pay the solicitor’s fees, which may vary and, of course, are a consideration. Another obstacle cited by the noble Baronesses, Lady Bakewell and Lady Flather, was that of complexity. We need to look at the balance of the arguments here. On the one hand, as I have mentioned, there are more than 1.3 million current instruments registered and LPA applications are increasing at quite a rate. Nevertheless, the OPG recognises that it is important to ensure that the LPA process is as straightforward as possible and acknowledges that some people find the existing LPA forms too complex to complete without legal assistance. It continually reviews its forms to make sure that they are easily understood. The OPG is also rewriting and restructuring its guidance and correspondence on LPAs so that it is clear, consistent and accessible to all.
	The noble Baroness, Lady Bakewell, asked whether Scottish powers of attorney were recognised in England and Wales. We are aware of the important question of cross-border recognition of powers of attorney, and are considering how best to address it. We are in frequent communication with our colleagues in the devolved Administrations—for example, in Northern Ireland, where that Administration is consulting on new mental capacity legislation based on our Mental Capacity Act. Clearly, raising awareness of issues surrounding mental capacity is a UK-wide concern. My officials intend to share learning with colleagues in the devolved Administrations as part of our upcoming work programme. I will be happy to write to the noble Baroness with the precise legal response in terms of the validity of Scottish lasting powers of attorney in England.
	I agree with the noble Baroness that raising awareness is important. We recognise that awareness among the general public of what an LPA is and the benefits of having one is low. We are working to increase this level of awareness, as I described. Having said that, we would not seek to tell adults that they should have an LPA; ultimately we believe that this is a matter of personal choice. My noble friend Lord Hodgson asked whether someone could use a power of attorney to make decisions about legacies. There are exceptions to the decisions that an attorney may make. I would be happy to write setting out these exceptions in more detail.
	I take the point made by the noble Baroness, Lady Flather, that it is important for people to know if someone has an LPA in place. Good practice is always changing, but we should not forget that lasting powers of attorney are registered by the Office of the Public Guardian, which maintains a register. Those who wish
	to know whether an LPA is in place may apply to the OPG to search the register. The noble Baroness, Lady Greengross, stressed the importance of carers. I absolutely agree that carers do a fantastic job supporting those who lack capacity. I am pleased to say that my department has worked closely with the Standing Commission on Carers—

Baroness Flather: My Lords—

Earl Howe: There is limited time.

Baroness Flather: Yes, I will be quick. The Office of the Public Guardian charges a lot of money to give the information.

Earl Howe: I will write to the noble Baroness about that. The Standing Commission on Carers, which represents the needs of carers to the government policy-making process, is a body we are working closely with. It will help us channel our new statement of rights directly to carers, providing them with an understanding of the rights of the person they care for under the law.
	The noble Baroness, Lady Wheeler, spoke about the need for professional training. I agree that that is vital. Health and social care professionals need to learn the basics of the MCA through their initial training and to keep updated on this through continuing professional development. Health Education England provides national leadership for planning and developing the whole healthcare workforce. The mandate set for it by the Department of Health specifically states that Health Education England should,
	“work with … partners … to improve skills and capability to respond … to the needs of people who may lack capacity as well as maximise the opportunities for people to be involved in decisions about their care”.
	The noble Lord, Lord Joffe, indicated that he felt that there was a lack of government leadership in this area. I would defend, in fact, our leadership record.
	We do not want to shy away in the least from our responsibilities when it comes to supporting better implementation of the Act. The legislation underpinning the MCA has been widely praised. Indeed, only a few months ago, we were visited by a delegation from the Swedish Government, who are looking to learn from our legislation as they draft their own. The problem is not the framework. The problem is a lack of understanding at the local level on the ground. It is the Government’s belief that the primary drivers of better implementation of the MCA are local organisations—hospitals, care homes, local banks and solicitors. That is why we intend to make the new national mental capacity forum, which we are setting up, predominantly outward looking. Its emphasis will be on forging collaborations, but then taking these out into the country and putting actions in place at the local level. I would be happy to write further on that, when I do write, as I shall, after this debate.
	I have overshot my time but, in conclusion, I emphasise that planning for a time in later life where we are unable to make our own decisions is something that we are all likely to benefit from and which can ease the burden on our loved ones. Unfortunately, as the noble Baroness, Lady Flather, reminded us, I know many people find this type of conversation uncomfortable—even morbid, perhaps. That is to an extent understandable: no one wants to dwell on the possibility of a serious debilitating disease or, indeed, on death itself.
	Ultimately, however, planning for the future can be greatly empowering. It can provide a degree of comfort as we approach a vulnerable period in our lives, it can allow us to determine how we are treated—which itself can improve our well-being and health outcomes—and it can provide comfort to our friends and family. The Government are determined to support our citizens in this regard, and the thoughts and expert advice of noble Lords are, as always, most welcome.

House adjourned at 8.56 pm.